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
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.
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.
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.
Swedish stars ask fans for £195 pledges on crowd-funding website
voicesJust when you thought you could find a man, get married, and have a baby by the age of 35... it turns out you’re too late, says Grace Dent
sportNapoli 2 Arsenal 0: Gunners must now face either Real Madrid, PSG, Bayern Munich, Atletico Madrid or Barcelona in knock-out stages
musicAs Mariah Carey and Noddy Holder rake in the royalties from their classics, why there hasn't been a decent festive hit for 20 years?
theatreAuthor Daniel Rosenthal recalls the mishaps that almost brought the curtain down on the likes of John Gielgud and Diana Rigg
filmFilm producers sue Warner Bros for $75m over Hobbit films
lifeAs the Royal Mail plans to phase out deliveries on two wheels, it's no wonder posties are in a spin
musicThe 21-year-old beat Ella Eyre and Chlöe Howl to win the honour
lifeFull of the joys and want to help your fellow man? December isn't the time to do it
techLuke Blackall reports on precision engineered prams and babygros that monitor your child 24-7
Nelson Mandela memorial: ‘Bogus’ interpreter made mockery of Barack Obama’s tribute
David Cameron explains selfie with Obama and Helle Thorning-Schmidt at Mandela Memorial
French café starts charging extra to rude customers
Krokodil in Mexico? Teenager hospitalised after 'injecting drug into her genitals'
Australia incest case: Filthy and severely deformed children found in remote farming community after generations of inbreeding
- 1 Nelson Mandela memorial: ‘Bogus’ interpreter made mockery of Barack Obama’s tribute
- 2 It’s shameful that our universities have accepted gender segregation under pressure from the most oppressive religious fanatics
- 3 John McAfee's $100 'anti-NSA' device: 'this is coming and cannot be stopped'
- 4 Is Facebook making us forget? Study shows that taking pictures ruin memories
- 5 Australia incest case: Filthy and severely deformed children found in remote farming community after generations of inbreeding
- < Previous
- Next >
£77099.84 - £96375.26 per annum + Bonus + Benefits : Harrington Starr: My clie...
£45000 - £60000 per annum + Bonus and Package: Harrington Starr: Trading appli...
£35000 - £38000 per annum + Benefits: Harrington Starr: C# .NET Developer (Win...
£60000 - £70000 per annum + Benefits: Harrington Starr: Senior QA Engineer Tes...