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Monday, February 04, 2013

Italian elections: Il Cavaliere goes all-in

With the Italian elections only three weeks away, Silvio Berlusconi has gone all-in with a number of big electoral pledges. The most eye-catching are:
  • Refund Italians for a levy on first homes (IMU) re-introduced by Mario Monti's technocratic government. Berlusconi had already pledged to scrap the tax, but has now raised the stakes further. 
  • Scrap Italy's Regional Tax on Productive Activities (Irap, which is levied on businesses) within the next five years.
  • Finalise a bilateral agreement with Switzerland allowing the Italian government to tax Swiss-based financial activities of Italian citizens. Berlusconi claims this would grant a one-off revenue of €25-30bn, and some €5bn a year.
  • Scrap public financing of Italian political parties.
  • Halve the number of parliamentarians (there are currently 630 MPs and 315 Senators).
Responses have been mixed. After comparing Berlusconi to the 'Pied Piper of Hamelin', Mario Monti has this time likened him to a "snake charmer" - a clear reference to Il Cavaliere's poor record when it comes to keeping electoral promises. Giulio Tremonti, who served as a Finance Minister several times under Berlusconi (although the two did not always get along particularly well, see our blog from August 2011), also noted that the tax refund pledged by Berlusconi would create "objective problems" with Italy's public finances. Incidentally, Tremonti is not a great fan of the agreement with Switzerland either.

But there is only one reaction Berlusconi is interested in at this point in time: the Italian electorate's. And his populist rhetoric seems to be paying off on that front. According to the daily opinion polls carried out by Tecnè for Sky TG24, Berlusconi's PdL party continues to gain ground and is now on 20.4%. Crucially, these polls also show that the gap between the centre-left coalition led by Pier Luigi Bersani and Berlusconi's centre-right coalition has narrowed to only 4% (the two blocs are on 32.9% and 28.9% respectively). Tecnè will tomorrow release the first survey conducted after the big promises we listed above. We wait with interest.

In the meantime, the Italian stock market and borrowing costs seemed to have begun pricing in the potential for a Berlusconi victory - along with the broad added uncertainty of a close election and the recent bailout of Banca Monte dei Paschi di Siena. The FTSE MIB fell 4.5%, while borrowing costs edged up to 4.47%. With another three weeks before the elections, we could yet see a few more days like this.

6 comments:

jon livesey said...

I have been saying - and posting - for a few years now that the real crisis for the EU and/or euro-zone will come when the conflict between the interests of the EU and the interests of domestic politics becomes just too wide to paper over.

Not so long ago, all politicians in office could be counted on to make the right sorts of pro-EU noises, even if they argued their national interests behind summit doors.

But now we have moved into a new phase, where being explicitly opposed to EU or euro-zone policies can have value in national politics.

Berlusconi and Cameron are recent examples, while anti-EU parties gained votes in Greece, and just last week the PM of the Netherlands suggested new opt-outs. Interesting times.

Rollo said...

He cannot meet all these promises and stay in the Euro. What an irony: Europe saved from the dictatorship of Brussels by Berlusconi. GO, SILVIO...

Agincourt said...

Best of luck, Silvio Berlusconi. The EU manoeuvred you out. Now, if you win again, you can pay the meddling EU back!

Anonymous said...

Agree with Rollo. What sweet irony it would be if Berlusconi was thrust back into the hot seat.

I would truly relish it if this were to happen.

I hope the Italians get behind him!

Go Silvio Go.... You have my vote!!

christina speight said...

We seem agreed. Monti is in receipt of an EU pension and is their (dare I say it?) Gauleiter in Italy almost like Quisling was in Norway, Bersani's lot are floundering out of their depth as socialists are everywhere. Berlusconi is a demagogue certainly but he is a very definitely ITALIAN demagogue and nationalism is stirring across Europe today.

AVANTI BERLUSCONI

Anonymous said...

Berlusconi reserve only the prison. He had ruined our country with his dictatorship. Do you leave thereand are you Italian 100% to be able to write such things?
Be ashame.