With a week to go before Italy’s parliamentary election, a late surge of support for former prime minister Silvio Berlusconi has raised fears about a new government’s commitment to economic reform and has caused yield spreads on Italian government bonds to widen.
Most political analysts still expect that a center-left coalition will emerge victorious from the February 24 election, but the pace of reform may well slow as elected politicians take back power from the technocratic government of Prime Minister Mario Monti, which has governed since November 2011.
The most recent Italian opinion polls showed the center-left Democratic Party headed by Pier Luigi Bersani had the support of 35 percent of the electorate, Berlusconi’s center-right coalition had 28.5 percent and Monti’s centrist group, Civic Choice, had 13.1 percent. A possible spoiler in the election was the antiestablishment Five Star Movement, headed by comedian Beppe Grillo, which polls show could take as much as 16 percent of the vote. There have been no polls since February 8 under Italian law, which bars polling in the closing stages of elections.
While Bersani’s lead seems strong enough to give him control of the lower house of parliament, he could be vulnerable in the upper house, the Senate. A loss in the Senate would produce a standoff remarkably similar to what is happening in the U.S. Congress. ....