Pier Luigi Bersani, the frontunner in Italy’s election campaign, will probably turn to caretaker Prime Minister Mario Monti for support should he fail to win a Senate majority, said the candidate’s economic-policy spokesman.
“Given the coherence with the coalition led by Premier Monti, I think the right way should be that of building an alliance” with him, Stefano Fassina said in an interview in his office in Rome today.
Italian bonds rallied on optimism a government led by a former Communist would maintain the policies that have eased the market mayhem that drove Silvio Berlusconi from office 14 months ago. The risk premium on Italian 10-year debt compared to German bunds fell to the lowest since July 2011.
Fassina’s remarks “show once again that the lack of a strong majority will force parties to form some alliance,” said Nicola Marinelli, who oversees $180 million at Glendevon King Asset Management in London. “All the parties are leaving doors open to every possible solution.”
Opinion polls show that while the coalition led by Bersani is headed for a majority in the lower house, it may fall short in the Senate. That would force Bersani’s Democratic Party to strike a deal with a partner after the Feb. 24-25 vote. Joining Monti risks straining ties with Bersani’s main ally, Nichi Vendola, head of the Left Ecology Freedom party, who has called for reversing some of Monti’s austerity policies.
Fassina said he’s confident there won’t be defections in the coalition should Bersani align with Monti.
“We can talk to other political forces without losing the center-left coalition’s cultural and political profile,” said Fassina, 46, a former International Monetary Fund economist.
Bersani said in a Jan. 9 with SkyTG24 that his bloc was open to the “moderates and pro-Europe” forces that oppose Berlusconi and would seek Monti’s support after the vote.
Monti, who earlier this month branded Fassina and Vendola as opposed to change and called on the Democratic Party “to silence” extreme positions within its ranks, has until now said it’s premature to talk about possible post-vote alliances.
Bersani’s coalition would get support of 34.9 percent should a vote be held today, while the center-right bloc, including Berlusconi’s People of Libery party, is now at 25.3 percent, according to a SWG poll released today. Monti’s coalition, which is running with a single list of candidates at the Senate, would get 13.8 percent, according to the same poll.
If elected, a government led by Bersani would reduce the tax burden for businesses and lower the maximum allowed cash payment to 100 euros to fight tax evasion, Fassina said.
While Italy is committed to respect European Union budget rules, the Democratic Party would lobby to relax fiscal policy, he added.
There are “no shortcuts” to reducing Italy’s 2 trillion euros ($2.7 trillion) of public debt apart from keeping a primary surplus and boosting growth, the Democratic Party’s economic policy spokesman said. “It would be easier to tell fairy tales, but this is the reality,” he said.
A Bersani-led government wouldn’t sell stakes in Eni SpA (ENI), Enel SpA (ENEL) and Finmeccanica SpA (FNC) as “the benefit in terms of debt reduction would be little, while the state would lose control of valuable pieces of industry,” Fassina said, adding that the Treasury’s target of assets sales worth 15 billion euros a year is “unrealistic.”
Italy, which is mired in its fourth recession since 2001, may have missed its target of a nominal shortfall of 2.6 percent of gross domestic product last year, Fassina said. The nominal deficit-GDP ratio for 2012 will “certainly result to be above” 3 percent, he said.
Italian daily MF reported today Italy may need as much as 7 billion euros of austerity measures in spring as tax revenue are lower than expected, citing unnamed government officials. “A budget adjustment at a time of extended recession would make the recession worse and as a consequence would push the public finance target further away,” Fassina said.