Italy’s elections have ended in stalemate with neither side gaining the upper hand, leading to fears that the Euro crisis could reignite.
Once all of the votes were counted it became clear that the centre-left party led by Pier Luigi Bersani won the lower house but failed to secure a majority in the nation’s senate. Silvio Berlusconi conceded defeat for the lower house vote but control of both houses is needed to govern.
The protest movement led by comedian Beppe Grillo won 25%. Meanwhile a bloc led by current Prime Minister Mario Monti came fourth, with just 10% of the vote, highlighting the unpopularity of Monti’s austerity measures.
The outcome of the vote should be a wakeup call to the EU. The Italian people have made it clear that they reject the EU’s austerity policies and interference. The rise of the anti-austerity Five Star Movement led by comedian Beppe Grillo winning a quarter of the vote proves that.
Grillo taunted his opponents saying; “We’ve started a war of generations, they are all losers, they’ve been there for 25 to 30 years and they’ve led this country to catastrophe.”
The Euro plummeted once the news broke, causing the single currency to fall to a seven-week low against the US Dollar and weakened against the Japanese Yen as investors ran for cover in the safe-haven currencies. The Euros decline against the Yen was its biggest decline since May 2010 when the markets were spooked by the violent ant-austerity protests began in Greece.
“The political situation across Europe is effectively a race between austerity and reforms on the one hand and the rise of populist movements on the other,” said Alberto Gallo head of European macro credit research at Royal Bank of Scotland Group Plc. “Austerity is painful, and if reforms are not implemented in time, you run the risk of social unrest and populism. It hasn’t happened so far in Greece, it hasn’t happened in Portugal or Spain, but we are very close in Italy.”
The main concern for the markets is that a hung parliament could threaten Italy’s economic reform policy and revive the spectre of the Eurozone debt crisis.
Current Euro exchange rates
As of 09:35 am
The Euro to Pound Sterling exchange rate is currently trading in the region of 0.8619
The Euro to US Dollar exchange rate is currently trading in the region of 1.3069
The Euro to Australian Dollar exchange rate is currently trading in the region of 1.2737
The Euro to New Zealand Dollar exchange rate is currently trading in the region of 1.5719
