Italy will see volatile general election campaign

Subject

Italy’s upcoming general election.

Significance

Two of the four main parties competing in Italy’s next general election on March 4 -- the Five Star Movement (M5S) and the Northern League, between them likely to win at least 40% of the vote -- are populist movements with marked anti-European and anti-immigrant elements. Neither will win a majority on its own, but their combined support levels will prevent either of the other two main parties, the Democratic Party (PD) and Forza Italia, from winning a majority.

Impacts

• Intensifying debates around Italy’s euro-area membership after the election would worry financial markets.
• A long period of political stalemate may undermine confidence in Italy’s capacity to implement reforms.
• The new electoral law may help in assembling majorities but the shape of the party system will continue to undermine strong coalitions.