Thursday, 28 February 2013

26 February 2013 Last updated at 08:40 ET

Italy election: Europe jitters over result deadlock


The election was called two months ahead of schedule

Italy's future

European politicians and markets have reacted anxiously after Italy's general election produced a stalemate between centre-right and centre-left blocs.
France and Germany urged continued reform, while Spain described the result as a "jump to nowhere".
Italian markets fell sharply while others in Europe and around the world opened down.
Centre-right leader Silvio Berlusconi said fresh elections should be avoided, and called for a period of reflection.

image of Gavin HewittAnalysisGavin HewittEurope editor, Rome
The horse-trading will now begin. Pier Luigi Bersani has enough votes to dominate the lower house. That is not the case in the Senate. Even if he were to join forces with the former Prime Minister Mario Monti he would not be able to command a majority there.
He may try to operate a minority government but that will clearly be unstable. There may be an attempt to form a wider coalition to govern the country at a time of economic crisis but it is unlikely to survive the summer.
One unanswered question is whether Beppe Grillo will be open to a deal. Would his movement support, say, a centre-left coalition in exchange for widespread reforms of the political system? We don't know. Buoyed up by success he has only promised to clear out the political class.
Sooner rather than later the country will hold another election.
The BBC's Alan Johnston in Rome says he was hinting at the possibility of considering what would be a very awkward alliance with his opponents on the centre-left.
With all domestic votes counted, Pier Luigi Bersani's centre-left bloc won the lower house vote but has failed to secure a majority in the Senate. Control of both houses is needed to govern.
A protest movement led by comedian Beppe Grillo won 25%, but the centrist bloc led by current Prime Minister Mario Monti came a poor fourth, with about 10%.
The outcome of the election, which comes amid a deep recession and tough austerity measures, was so close between the two main blocs that the margin of victory given in interior ministry figures was less than 1% in both houses of parliament.
The winning bloc automatically gets a majority in the lower house. But the same is not true in the Senate, where seat allocations are decided by region and can conflict with the national vote.
Graphic showing distribution of seats
'Jump to nowhere'
European politicians reacted with a mixture of calm and concern.
European Commission spokesman Olivier Bailly said the EU expected Italy to "honour its commitments" on debt and deficit reduction, and other structural reform.

Pier Luigi Bersani: "we have a major responsibility in the light of the outcome of the election".
"We clearly hear the message of concern expressed by Italian citizens," he said at a news conference.
"The Commission has full confidence in Italian democracy and... will work closely with the future government towards the relaunch of growth and job creation in Italy."
French Finance Minister Pierre Moscovici said the result "creates problems" but would not undermine the European single currency.
German Foreign Minister Guido Westerwelle, meanwhile, urged Italy to continue its reforms, and called for a government to be formed "as quickly as possible".
But his Spanish counterpart there was "extreme concern" about the financial consequences.
"This is a jump to nowhere with positive consequences for nobody," Jose Manuel Garcia-Margallo said, according to Associated Press news agency.
Shares and the euro fell as the outcome of the election became clear, amid concern that the reform agenda would be delayed.

Beppe Grillo's platform

Beppe Grillo's Five Star Movement is now the largest faction in the lower house, and he may have a kingmaker role in the Senate. Many of his policies are vague, but some of his aims include:
  • New electoral system, based on proportional representation; halving number of MPs; end of public funding of parties
  • His MPs will only take part of their salary, and will serve a maximum two terms
  • Support for renewable energy, free internet provision
  • Voting age reduced to 16 (from 18) and 18 for the Senate (from 25)
  • Referendum on leaving euro
Italy's FTSE MIB index intially fell 4.7%, while London's FTSE 100 shed 1.5% and share markets in Frankfurt and Paris also fell more than 2%.
In New York, the Dow Jones Industrial Average fell 1.55% and Asian markets lost between 0.7% and 2.2%.
The yield on Italian government bonds rose sharply, implying markets are more wary of lending to Italy.
'Sacrifices'
BBC economics correspondent Andrew Walker says it will be difficult to form a new government with an agreed economic programme.
As Mr Berlusconi conceded to his opponents in the lower house, he said that everyone should now reflect on what to do next so that fresh elections could be avoided.
"Italy must be governed," Mr Berlusconi said. "Everyone must be prepared to make sacrifices."
He would not do a deal with Mr Monti's centrist bloc, he added, saying that the prime minister's poor showing was down to popular discontent with his austerity measures.
Mr Berlusconi, 76, left office in November 2011, facing claims of economic mismanagement as the eurozone struggled to contain Italy's debt crisis.
Italians have had more than a year of technocratic government under Mario Monti. But his attempts to reduce spending caused widespread public resentment and his decision to head a centrist list in the parliamentary elections attracted little more than 10% of the vote.
In a surge in support, Beppe Grillo's anti-austerity Five Star Movement attracted more than a quarter of the vote, making it the most popular single party in the lower chamber.
Correspondents say this was an extraordinary success for the Genoese comic, whose tours around the country throughout the election campaign - hurling insults against a discredited political class - resulted in his party performing well in both chambers.              bbc
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