Suggestions of snap election get louder in Italy

The path for a snap election in Italy is clearing up as political parties are closing in on an electoral deal that would open up the path for a snap election. Italy’s biggest parties are considering a proportional system similar to the German model with a 5 percent cut-off for smaller parties, and lawmakers are due to discuss a first draft of the new law early next month. An agreement would remove any hindrance to snap elections, eliminating the need to wait for scheduled elections in early 2018.

Speaking in a newspaper interview, the former Prime Minister of Italy Matteo Renzi suggested over the weekend that a snap election could be held in Italy in the Autumn, same time as the German election, to reduce the uncertainties in the market with regard to European election. Italian bonds have been the worst performers in Europe this week following Renzi’s comments. Since Monday the yield on Italian 10-year bonds has risen nine basis points to 2.19 percent, pushing the yield spread over German bunds to 189 basis points.

Italy is the third-largest economy in the Eurozone, and the politicians want to get rid of the political uncertainties in the country before so that a unified successful Brexit talk can commence. According to polls, Italy’s Five Star Movement Party is leading and might win the majority of the seats in the next election defeating Matteo Renzi’s ruling Democratic Party.