Italy

Italy: Fall elections and M5 victory coming

We have long argued that despite the noise elections will take place as scheduled in 2018, but we have changed our view.

1. The coalition is breaking, AP seems to have officially left yesterday.

2. The ECB’s insistence about exiting QE and -ve rates at the same time creates uncertainty for next year

3. The long awaited agreement on the new electoral law seems to have been reached. 

 

As things stand today, the most likely winner is a coalition of the Eurosceptic parties led by M5. Somewhat ironically, although surveys continue to show that Italian’s dissatisfaction with the EU is very high – but a large majority is still willing to vote NO in a hypothetical referendum on the EU membership. So even if the Eurosceptic win, their key priorities will not be investors’ much feared euro referendum, but rather their plan on jobs, migration (inwards and outwards) and wealth creation.