Europe jitters over Italy deadlock

Written By Unknown on Selasa, 26 Februari 2013 | 19.15

26 February 2013 Last updated at 06:59 ET
Katya Adler with Italian newspapers

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The BBC's Katya Adler says many people are lost for words over the result

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.

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%.

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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 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 seats in the Senate depend more on success in individual regions.

'Jump to nowhere'

European politicians reacted with a mixture of calm and concern.

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 that does not bode well either for Italy or for Europe," Garcia-Margallo said, quoted by Reuters news agency.

Shares and the euro fell as the outcome of the election became clear, amid concern that the reform agenda would be delayed.

Italy's FTSE MIB index fell 4.7%, while London's FTSE 100 shed 1.5% and share markets in Frankfurt and Paris also fell more than 2%.

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Chamber of Deputies (lower house):

  • Pier Luigi Bersani's centre-left Democratic Party-led bloc: 29.54% of the vote (will have 340 seats as the winning bloc)
  • Silvio Berlusconi's centre-right People of Freedom Party-led bloc: 29.18% (124 seats)
  • Beppe Grillo's anti-austerity Five Star Movement: 25.55% (108 seats)
  • Mario Monti's Civic Choice movement: 10.56% (45 seats)

The Senate (upper house):

  • Neither of the two biggest parties and their allies thought to be close to the 158 seats needed to have a working majority
  • Latest figures show the Democratic Party bloc winning about 113 seats (31.63% of the vote)
  • The People of Freedom Party bloc to win 116 seats (30.72% of the vote)
  • Five Star Movement to win 54 seats (23.79%)
  • Civic Choice 18 seats (9.13%)

Source: Interior ministry

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.


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