Can elections in Italy and Germany derail Eurozone?

José Manuel Barroso, President of the EC (left), receives Pier Luigi Bersani, Secretary of the Italian Democratic Party. (EC Audiovisual services).

José Manuel Barroso, President of the EC (left), receives Pier Luigi Bersani, Secretary of the Italian Democratic Party. (EC Audiovisual services).

With Eurozone’s fiscal consolidation and financial supervision having being concretely scheduled for accomplishment within this year, investors and financial markets relaxed their fears over a possible disintegration of the single money zone and returned even to the Greek bond market. On the political front however still remain some dark spots over two anchor countries Italy and Germany. UK’s plans for a referendum on the country’s position in or out of the EU some-time in 2015 do not pose any serious threat to Eurozones’ developments.

Italian elections

Elections in Italy and Germany though do pose a number of questions. What if Silvio Berlusconi defies public opinion polls and wins the election? However his centre-right coalition is 12 percentage units  behind the undisputable front-runner centre-left under Pier Luigi Bersani, expected to attract 38% of the vote. Berlusconi’s People of Freedom (PdL) lags behind with 26%, Mario Monti’s centre political formation at 16% and Beppe Grillo’s, Five Stars at 13%. All that, according to a public opinion poll published yesterday by La Republica newspaper.

If one wants to divide the Italian political parties in pro-European Union and anti-EU, on this latter category there won’t be any. It’s only Berlusconi who lately appeared strongly against the austerity package introduced by care taker Prime Minister Mario Monti fourteen months ago.

The three times prime minister however went as far as not only to pull down the Monti government and send the country to an early election on 24 and 25 February, but he went as far as to accuse Eurozone for all the economic woes of his country. Berlusconi insists that if Italy had the Lira as national currency, a generous devaluation would have solved all problems. He says nothing though about how Italy could repay its debts with a devalued national currency.

Summing up Italy’s political scenery Pier Luigi Bersani, the leader of Italy’s Democratic Party of centre-left will predictably be the next Prime Minister of the country. He has being steadily supporting Mario Monti’s tough measures during the past year, despite strong opposition at times even from within his own party. Unlike Berlusconi he didn’t change his policy line in the mid of the road, nor he promises easy but fictitious solutions to his compatriots. Seemingly this tactic is winning and Bersani, probably together with Monti will undertake the task to keep Italy in a steady course. This is sine qua non for a smooth return of Eurozone to normality and growth.

The country’s sovereign debt is so large that it has to be self financed. Eurozone could never do for the Italian debt what it did for the three programme countries (Greece, Ireland and Portugal). No wonder why the political news from Italy lies in the background of the latest good performance of all European markets and the rise of the euro with the dollar.

Germany

Let’s pass now to the other general election in a central Eurozone country, the single money zone’s economic powerhouse, Germany. In this election no possible outcome may pose any visible financial or otherwise risk for the entire money zone. Of course on the personal level another win by Angela Merkel will consolidate the applied severe policies on every front, from internal targets for fiscal surpluses to the draconian austerity imposed on Greece. A possible win of the Socialists-Greens coalition wouldn’t drasticaly change the economic policy scenery, but it can lead to a noticeable relaxation of the strict character of the applied measures.

In short the political developments in the single European money zone are not unpredictable. And predictability is at the heart of all financial markets. In this respect the predictable outcome of the Italian elections is at the core of Eurozone future. The extraordinary size of the Italian debt, close to two trillion euro, doesn’t permit any experiments financial or political. As for Germany the country’s political elite has proved it can deliver realistic solutions.

the sting Milestone

Featured Stings

Can we feed everyone without unleashing disaster? Read on

These campaigners want to give a quarter of the UK back to nature

How to build a more resilient and inclusive global system

Stopping antimicrobial resistance would cost just USD 2 per person a year

MEPs call for safety and liability rules for driverless cars

Bosnia and Herzegovina: EU allocates additional €3.5 million to support vulnerable refugees and migrants

Half the world’s refugee children not in school, UN agency finds

2014 will bring more European Union for the big guys and less for the weak

South Eurozone urgently needs fairer distribution of taxation burden

To feed 10 billion people, we must preserve biodiversity. Here’s how

Parliament requests further action to save EU tourism

The silent code blue- a call for health worker’s safety

The United States divorce rate is dropping, thanks to millennials

Taking care in times of social isolation goes beyond washing hands or wearing masks

G20 LIVE: G20 leaders reaffirm OECD’s role in ensuring strong, sustainable and inclusive growth

‘I thought I’d never get out alive’ – the Muslim director who interviewed neo-Nazis

Over 330,000 Congolese migrants at risk after mass deportations from Angola – UN rights chief

‘Provocative actions and inflammatory rhetoric’ destabilizing Middle East, warns top UN official

Smoking VS Vaping: is it a battle?

The world’s economy is only 9% circular. We must be bolder about saving resources

Security Union: A Counter-Terrorism Agenda and stronger Europol to boost the EU’s resilience

UN chief pays tribute to the courage of DR Congo citizens, and the sacrifice of blue helmets

Hardened creditors drive Greece to dire straits; Tsipras desperate for an agreement

No great discovery was made without a bold guess – Isaac Newton

OECD Donor countries need to reform development finance to meet 2030 pledge

How trade wars pose a threat to the global economy

Austria: reforms will be necessary to uphold high well-being levels

Human Rights Council election: 5 things you need to know about it

How can the EU hit net-zero emissions?

Digital learning can help us close the global education gap. This is how

EU security and defence industry prepares positions for ‘producers’ and ‘customers’

More attacks, ‘persisting security challenges’ threaten progress in West Africa, Sahel

Youth for Climate Change

North Korea missile tests ‘deeply troubling’: senior UN official

How can we build a workforce for our digital future?

Populist Eurosceptics helped by Trumpists seriously threaten the EU edifice

Eurozone: Inflation plunge to 0.4% in July may trigger cataclysmic developments

The latest technology isn’t enough – you need the business model to go with it

Energy Union: deals on efficiency targets and governance

If we don’t protect the ocean, humanitarian disaster awaits

IMF’s Lagarde indirectly cautioned Eurozone on deflation

Trump’s Syrian hit the softest option vis-a-vis Russia

Where is Egypt leading the Middle East and the Mediterranean economy?

European Commission authorises second safe and effective vaccine against COVID-19

GradList Launched At TheNextWeb 2014

Africa-Europe Alliance: Denmark provides €10 million for sustainable development under the EU External Investment Plan

To rebuild trust in the media, we must empower its consumers

Germany and Europe prepare for Trump’s America

Eurogroup asked to reduce public debts of its member states

What’s behind South Korea’s elderly crime wave?

Medicine and mental health: relax, the doctor is a lifelong learner

Spending on health increase faster than rest of global economy, UN health agency says

Campaign kicks off with High-level Event on #FairInternships

Tackling the toxic norms that hold women back in Asia

Act now to end violence, Zeid urges Nicaraguan authorities

Efforts to save the planet must start with the Antarctic

Transport Committee pledges to stop empty flights due to COVID-19

Hiring more female leaders is good for profits. Here’s the evidence

‘Preserve, revitalize and promote’ indigenous languages, or lose a ‘wealth of traditional knowledge’, UN chief says

Europe led by Germany seems vulnerable to Trump’s threats

Labels for tyres: deal for greener and safer road transport

Pro-EU forces won a 70% triumph in the European elections

With 5 billion set to miss out on health care, UN holds landmark summit to boost coverage

Energy security: The synchronisation of the Baltic States’ electricity networks – European solidarity in action

More Stings?

Advertising

Speak your Mind Here

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s