ITALY IS HOLDING its final day of campaigning today ahead of crucial elections, as international investors warned an unclear outcome could shake the economy and set off shockwaves through the eurozone.
Italians will cast their ballots on Sunday and Monday as they grapple with the longest recession in two decades and austerity cuts that have caused deep resentment in the euro area’s third economy.
The most likely outcome is a centre-left government led by Democratic Party leader Pier Luigi Bersani, a former communist with a down-to-earth manner who now espouses broadly pro-market economic views.
“I am very, very confident of victory although we should not underestimate the right,” Bersani said in one of his last television interviews ahead of Saturday, when no campaigning is allowed.
But the result is by no means certain and whether Bersani can form a stable coalition with a majority in both houses of parliament is in serious doubt, putting the financial markets on edge.
The European Commission added further pressure today, downgrading its forecast for the Italian economy to a 1.0 per cent contraction this year from its previous forecast of a 0.5 per cent shrinkage.
Bersani is due to address his last electoral meeting in Rome later today while his rival Silvio Berlusconi will address a rally in Naples.
Pier Luigi Bersani, the leader of the Italy Democrats Party. (Photo: AP Photo/Markus Schreiber)
With everything at stake, the campaign has been remarkably underwhelming, with few rallies and a lot of back-and-forth in television interviews with little or no hard detail on electoral promises.
A case in point was Silvio Berlusconi’s vow to refund Italians an unpopular property tax levied by Prime Minister Mario Monti in an official-looking letter that prompted some people to queue up at post offices to claim their money straight away.
European capitals and foreign investors will be watching closely as a return to Italy’s free-wheeling public finances could spell disaster for the eurozone.
“We believe that a risk exists that after the February 24-25 elections there may be a loss of momentum on important reforms to improve Italian growth prospects,” Standard & Poor’s ratings agency said in a report this week.
London-based Capital Economics warned that even with a stable governing majority “huge underlying economic problems suggest that it may only be a matter of time before concerns about the public finances begin to build again.”
“And a hung parliament might plunge Italy and the eurozone back into crisis rather sooner,” the economic research company said this week.
Polls open at 7am GMT on Sunday and close at 7pm GMT. A second day of voting on Monday begins at 6am GMT and ends at 12pm GMT, after which preliminary results will begin to trickle through late Monday and into Tuesday.
Electoral posters in Italy (AP Photo/Gregorio Borgia)
The wild card in the election will be Beppe Grillo, a tousle-haired former comedian whose mix of invective and idealism has appealed to crowds of protest voters fed up with corrupt politicians.
Grillo’s last election rally later on Friday in a large square in Rome traditionally associated with the left is expected to be packed with supporters.
Bersani has said he will follow the course set by Monti, a former high-flying European commissioner roped in to replace the scandal-tainted Berlusconi who was forced to step down in November 2011.
But Bersani will come under immediate pressure to row back on austerity and do more to create jobs in an economy where an already record-high unemployment rate of 11.2 per cent masks far higher joblessness among women and young people.
A Bersani victory is far from a sure thing mainly because of the rapid rise in the polls of Berlusconi, the irrepressible 76-year-old billionaire tycoon who is still in the game even after 20 tumultuous years in Italian politics.
This is the sixth election campaign for Berlusconi, who has been prime minister three times, has survived multiple court cases, sex scandals and diplomatic gaffes and has turned into something of an international pariah.
One recent poll said he was within 2.5 points of catching up with Bersani.
Berlusconi has pursued a populist campaign, intimating that Italy’s social misery can be blamed on a “hegemonic” Germany imposing austerity.
The president of the European Parliament, Martin Schulz, who was once invited to play the role of a Nazi camp guard by Berlusconi, has warned Italians not to vote for the flamboyant tycoon.
Several polls indicate that Bersani may score only a half-victory by managing to secure a stable majority in the lower house of parliament, the Chamber of Deputies, but failing to get one in the upper house, the Senate.
That would give Monti, an economics professor who is running as head of a centrist grouping, a key role as a coalition partner and could bring him back into a government with a ministerial posting.
An average of the most recent polls would give Bersani 34 percent, Berlusconi 30 percent, Grillo 17 percent and Monti around 11 percent of the vote.
Coming after the last polls were made public, Pope Benedict XVI’s resignation could boost the church-going Monti and stop Berlusconi in his tracks as it has drawn away the media attention that the showman tycoon has often relied on.
The run-up to the vote has also been marked by a succession of high-profile corruption inquiries against politicians and business leaders in a period similar to one in the early 1990s that brought down Italy’s entire political system.
Monti says the scandals mark “the end of an era”.