Arab Today, arab today italy political chaos rattles markets
Last Updated : GMT 16:31:37
Arab Today, arab today
Arab Today, arab today

Italy political chaos rattles markets

Arab Today, arab today

Arab Today, arab today Italy political chaos rattles markets

Rome - AFP

Italy\'s stock market plunged over three percent on Monday after a weekend of political drama in which Prime Minister Mario Monti announced his intention to resign and Silvio Berlusconi launched a comeback bid. After months on the financial hire-wire for Italy in 2011, Monti\'s arrival in power last year and the austerity measures he has imposed worked to calm the markets. But they are now anxious that his impending departure will fling the country back into the eurozone debt crisis mire once more. \"Everyone\'s fears are concentrated on the performance of a country which, just a year ago when Berlusconi was at the helm, risked bringing down the euro and the global economy with it,\" the Repubblica newspaper said. The developments have put the Monti government\'s reform agenda on hold and brought forward the election, with a vote now expected as early as February -- well before the government\'s mandate runs out at the end of April. \"We should probably expect a sell-off in Italian assets,\" said Erik Nielsen, the London-based chief economist for Italian banking giant UniCredit. He also forecast increased \"pressure\" on debt markets, leading up to a medium-term bond auction on Thursday and \"volatile weeks\" ahead. The Italian stock market opened down and plunged to minus 3.43 percent around 0945 GMT, with the banks leading the drop. But Nielsen said he was \"not seriously worried\" about Italy\'s prospects since the two most likely outcomes for elections were either a coalition led by the centre-left Democratic Party or a new Monti government. Centre-left leader Pier Luigi Bersani has promised to keep the course set by Monti if he is elected, although he has said he would moderate some of the most controversial austerity measures and put more emphasis on growth and jobs. Greater unease could come from Berlusconi\'s return to the fray and his announcement that he will wage a campaign against key aspects of Monti\'s agenda as well as \"diktats\" from leading European powers like Germany, analysts said. Late Sunday, Berlusconi stressed his dim view of the Monti government. \"There is not one single economic indicator which is positive. The experiment with a technocrat government is over -- with, alas, totally negative results,\" he said. The Italian press spoke of a Berlusconi \"coup\". A three-time prime minister, the 76-year-old Berlusconi is running for office for the sixth time in two decades in politics. In the latest in a series of trials against him, he was convicted of tax fraud in October but his sentence to a year in prison and a five-year ban from holding public office have been suspended pending an appeal. Berlusconi is also still a defendant in a trial for having sex with a 17-year-old prostitute while he was prime minister and for abusing the powers of his office by having her released from police custody. Berlusconi\'s People of Freedom (PDL) party has withdrawn its support for Monti\'s government, which it had previously backed as part of a grand coalition to prevent Italy from being swept into the eurozone debt crisis whirlwind. A former high-flying European commissioner and economics professor, Monti took over in November 2011 after Berlusconi was forced out by a parliamentary revolt, a wave of panic on the financial markets and a series of sex scandals. Supporters say Monti has managed to pull Italy back from the brink of bankruptcy by putting public finances in order and launching a number of long-delayed reforms to free up the economy and boost its growth prospects. International investors have generally hailed his reforms, as well as his efforts to boost Italy\'s credibility on the European and world stage. The differential or \"spread\" between Italian and benchmark German 10-year-sovereign bonds -- a key measure of investor sentiment -- has narrowed by half since he took over after hitting nearly unsustainable levels. On Monday, the ten-year rate for government bonds shot up from 4.52 percent to 4.75 percent. Some of Monti\'s measures -- like the introduction of a new property tax, budget cuts and a reform of pensions -- have proved deeply unpopular among ordinary Italians. But key European figures have called for any future leader to continue the work done so far. On Monday, top European Central Bank member Joerg Asmussen told Germany\'s Bild daily that Monti\'s government had \"achieved a great deal in a short time: winning back investor confidence and pushing forward budgetary consolidation.\" \"Whoever governs Italy, a founding country of the EU, after the election must continue this course,\" he said. All the most recent polls show the main centre-left Democratic Party as the favourite to win the general election, although without an outright majority which would mean a coalition government. Some polls show the People of Freedom party trailing in third place after Five Star Movement led by populist blogger Beppe Grillo, who has attracted younger voters with an anti-establishment, pro-environment message.

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Arab Today, arab today italy political chaos rattles markets Arab Today, arab today italy political chaos rattles markets

 



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