FTSE 100 down as protest vote leaves hopes of stable Italian government fading

Berlusconi group may have scuppered Bersani coalition’s chances of crucial Senate majority

The prospect of a hung parliament in Italy put stock markets under heavy selling pressure this morning as an election deadlock sparked fears of more uncertainty in the eurozone.

Pierluigi Bersani’s centre-left coalition failed to secure victory in both houses of parliament last night despite being on course to poll more votes than the centre-right bloc led by Silvio Berlusconi.

The situation leaves the country facing months of political uncertainty and threatens to reignite the eurozone crisis, as the austerity programme that has pulled Europe's third-largest economy - and one of its most indebted - back from the brink is now in doubt. Financial markets initially reacted positively when exit polls suggested Mr Berlusconi's coalition was likely to trail Mr Bersani's by around 6 percentage points. But when the gap narrowed as the actual results began to filter through, Italy's borrowing costs began to rise as investors took fright at the prospect of a divided parliament.

The FTSE 100 Index was more than one per cent lower this morning, and markets in France and Germany were down by around 2 per cent.

The centre-left won the biggest share of the vote for the lower house by a margin of less than 0.5 per cent over Mr Berlusconi's right-wing coalition (29.5 to 29.1 per cent). But the tiny margin was sufficient for Mr Bersani to be assigned a majority.

He called the result on Twitter just before midnight. "The centre-left has won the lower house and is ahead in the Senate. We will manage the responsibility given to us by the 2013 election in the interests of Italy," he said. But in reality his options are limited with no majority in the Senate to pass legislation. Late last night Angelino Alfano, the secretary of Mr Berlusconi's PDL party, suggested the result in the lower house was so close that recounts might be needed.

Meanwhile, the leading daily newspaper Corriere della Sera declared that Italy was "ungovernable". Foreign investors had been hoping for stable reform-minded government in Italy to underpin the Continent's efforts to beat the sovereign debt crisis that saw Mr Berlusconi's government forced from office and replaced by a technocratic administration led by Mario Monti in late 2011.

The election was also notable for the size of the protest vote won by the anti-establishment Five Star Movement led by comedian Beppe Grillo, and the unexpectedly poor showing from Mr Monti's centrist coalition which damaged Mr Bersani's chances of forming a working majority in both houses.

Political pundit Professor James Walston, of the American University in Rome, said: "If these indications prove correct, there will be new elections in months. And in the meantime, starting tomorrow or even tonight, the markets will be going bananas."

Soon after the polling stations closed, exit polls were predicting Mr Bersani's centre-left bloc had won 32-38 per cent of the vote in the lower house of parliament. Should this result be confirmed by the count itself, Mr Bersani's group would have won a majority and be asked to form a government. Mr Berlusconi's right-wing coalition was estimated to have won between 28-32 per cent, followed by the Five Star Movement with 19-21 per cent. The exit polls suggested Mr Monti's centrist grouping had won less than 10 per cent of the vote.

In the vital race for the Senate, however, the centre-left and centre-right appeared to be neck and neck at around 30 per cent. Mr Grillo's party polled strongly in the upper house, with 25 per cent, according to exit polls.

Mr Berlusconi's stronger performance in the big, traditionally conservative regions, which carry more Senate seats, appeared to doom the centre-left's chances of majority in both houses. Crucially, without a working majority in the 315-seat upper chamber, Mr Bersani's Democratic Party would be unable to pass legislation - leaving him with a lame-duck administration. Partial results posted by the Interior Ministry suggest Mr Grillo's party would command more than 50 Senate seats.

Before the vote, Mr Grillo - who is not able to stand for parliament after he was convicted of manslaughter in 1980 when three passengers were killed in a car he was driving - vowed his movement would not do deals with mainstream parties after the election.

Putting houses in order: possible outcomes

Scenario one

The centre left, led by Pier Luigi Bersani, wins a majority in the upper and lower houses of parliament. Mr Bersani is viewed as an EU-friendly, pragmatic politician, who introduced liberalising measures in his days as Italy's Economic Development Minister in 2006 to 2008. He could be expected to continue reforms but ease back on austerity. But his party's links to the powerful left-wing public-sector union CGIL might scupper his chances of modernising Italy's rigid employment laws.

Scenario two

The centre left wins the lower house but fails to get a majority in the upper house. If this happens, Mr Bersani would be unable to pass legislation, because the Senate has equal power. So Mr Bersani would need allies to form a working government, with Mario Monti's pro-reform bloc the obvious candidate. A Bersani-Monti pact would please Brussels, Berlin and most investors. But Mr Monti's weak showing suggests he may have very few Senate seats to offer the centre left.

Scenario three

The centre left wins the lower house but fails to form a coalition needed to pass legislation through the Senate. Last night, this outcome was looking increasingly likely as the Democratic Party failed to make inroads to the "swing-state" regions of Lombardy, Veneto and Campania. Such a lame-duck administration might limp on for a few months but fresh elections would be virtually certain - and financial instability in Italy and beyond, a very real danger.

News
A 1930 image of the Karl Albrecht Spiritousen and Lebensmittel shop, Essen. The shop was opened by Karl and Theo Albrecht’s mother; the brothers later founded Aldi
people
Arts and Entertainment
Standing the test of time: Michael J Fox and Christopher Lloyd in 'Back to the Future'
filmA cult movie event aims to immerse audiences of 80,000 in ‘Back to the Future’. But has it lost its magic?
Arts and Entertainment
Flora Spencer-Longhurst as Lavinia, William Houston as Titus Andronicus and Dyfan Dwyfor as Lucius
theatreThe Shakespeare play that proved too much for more than 100 people
News
exclusivePunk icon Viv Albertine on Sid Vicious, complacent white men, and why free love led to rape
PROMOTED VIDEO
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Arts and Entertainment
Stir crazy: Noel Fielding in 'Luxury Comedy 2: Tales from Painted Hawaii'
comedyAs ‘Luxury Comedy’ returns, Noel Fielding on why mainstream success scares him and what the future holds for 'The Boosh'
Life and Style
Flow chart: Karl Landsteiner discovered blood types in 1900, yet scientists have still not come up with an explanation for their existence
lifeAll of us have one. Yet even now, it’s a matter of debate what they’re for
Arts and Entertainment
'Weird Al' Yankovic, or Alfred Matthew, at the 2014 Los Angeles Film Festival Screening of
musicHis latest video is an ode to good grammar. But what do our experts think he’s missed out?
Sport
New Real Madrid signing James Rodríguez with club president Florentino Perez
sportColombian World Cup star completes £63m move to Spain
Travel
Hotel Tour d’Auvergne in Paris launches pay-what-you-want
travelIt seems fraught with financial risk, but the policy has its benefits
Arts and Entertainment
booksThe best children's books for this summer
Life and Style
News to me: family events were recorded in the personal columns
techFamily events used to be marked in the personal columns. But now Facebook has usurped that
Independent
Travel Shop
the manor
Up to 70% off luxury travel
on city breaks Find out more
santorini
Up to 70% off luxury travel
on chic beach resorts Find out more
sardina foodie
Up to 70% off luxury travel
on country retreats Find out more
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Sustainability Manager

Competitive: The Green Recruitment Company: Job Title: Scheme Manager (BREEAM)...

Graduate Sustainability Professional

Flexible, depending on experience: The Green Recruitment Company: Job Title: T...

Programme Director - Conduct Risk - London

£850 - £950 per day: Orgtel: Programme Director - Conduct Risk - Banking - £85...

Project Coordinator/Order Entry, SC Clear

£100 - £110 per day: Orgtel: Project Coordinator/Order Entry Hampshire

Day In a Page

Noel Fielding's 'Luxury Comedy': A land of the outright bizarre

Noel Fielding's 'Luxury Comedy'

A land of the outright bizarre
What are the worst 'Word Crimes'?

What are the worst 'Word Crimes'?

‘Weird Al’ Yankovic's latest video is an ode to good grammar. But what do The Independent’s experts think he’s missed out?
Can Secret Cinema sell 80,000 'Back to the Future' tickets?

The worst kept secret in cinema

A cult movie event aims to immerse audiences of 80,000 in ‘Back to the Future’. But has it lost its magic?
Facebook: The new hatched, matched and dispatched

The new hatched, matched and dispatched

Family events used to be marked in the personal columns. But now Facebook has usurped the ‘Births, Deaths and Marriages’ announcements
Why do we have blood types?

Are you my type?

All of us have one but probably never wondered why. Yet even now, a century after blood types were discovered, it’s a matter of debate what they’re for
Honesty box hotels: You decide how much you pay

Honesty box hotels

Five hotels in Paris now allow guests to pay only what they think their stay was worth. It seems fraught with financial risk, but the honesty policy has its benefit
Commonwealth Games 2014: Why weight of pressure rests easy on Michael Jamieson’s shoulders

Michael Jamieson: Why weight of pressure rests easy on his shoulders

The Scottish swimmer is ready for ‘the biggest race of my life’ at the Commonwealth Games
Some are reformed drug addicts. Some are single mums. All are on benefits. But now these so-called 'scroungers’ are fighting back

The 'scroungers’ fight back

The welfare claimants battling to alter stereotypes
Amazing video shows Nasa 'flame extinguishment experiment' in action

Fireballs in space

Amazing video shows Nasa's 'flame extinguishment experiment' in action
A Bible for billionaires

A Bible for billionaires

Find out why America's richest men are reading John Brookes
Paranoid parenting is on the rise - and our children are suffering because of it

Paranoid parenting is on the rise

And our children are suffering because of it
For sale: Island where the Magna Carta was sealed

Magna Carta Island goes on sale

Yours for a cool £4m
Phone hacking scandal special report: The slide into crime at the 'News of the World'

The hacker's tale: the slide into crime at the 'News of the World'

Glenn Mulcaire was jailed for six months for intercepting phone messages. James Hanning tells his story in a new book. This is an extract
We flinch, but there are degrees of paedophilia

We flinch, but there are degrees of paedophilia

Child abusers are not all the same, yet the idea of treating them differently in relation to the severity of their crimes has somehow become controversial
The truth about conspiracy theories is that some require considering

The truth about conspiracy theories is that some require considering

For instance, did Isis kill the Israeli teenagers to trigger a war, asks Patrick Cockburn