The anti-establishment 5-star movement has flatly rejected proposals from centre-left leader Pier Luigi Bersani to form a government in the politically deadlocked nation.
The movement led by political firebrand and comedian Beppe Grillo refused to accept Bersani’s offer after repeatedly saying that it would not back any of the major political parties that it blames for running Italy into the ground.
The impasse now means that Italy has not had an effective government for over a month and with no break to the deadlock likely to occur in the near future, fears are growing that a re-run of the election can’t be far off.
“There are no conditions that would allow us to give a confidence vote to a government made up of these parties because they have no credibility,” the group’s Senate leader Vito Crimi said after meeting Bersani.
Economists and investors are watching the situation closely as the impasse coincides with the botched Cypriot bailout. The prospect for market turmoil remains extremely high as uncertainty continues to be rife in the Eurozone.
As a result of the turmoil the Euro has fallen below the $1.28 mark against the US Dollar.
“A bit of pessimism out of Italy is certainly part of the story and obviously the Cypriot reverberations continue,” Eric Lascelles, chief economist in Toronto for RBC Global Asset Management, said; “There is a general level of wariness. It’s not that there’s a likely disaster in the next few days. It’s more along the lines that Europe is materially riskier than previously imagined and so exposure to European investment is riskier than first thought.”
Bersani is expected to see to President Giorgio Napolitano later this week to report on the meetings he has held with rival parties this week.
If he cannot reach an agreement, Napolitano may appoint a respected outsider to try to form a technocrat government or a broad cross-party coalition. If that fails, Italy faces the prospect of a return to the polls within months.
As of 14:20 pm
The Euro to Pound Sterling exchange rate is currently trading in the region of 0.8458
The Euro to US Dollar exchange rate is currently trading in the region of 1.2771
The Euro to Australian Dollar exchange rate is currently trading in the region of 1.2242
The Euro to New Zealand Dollar exchange rate is currently trading in the region of 1.5294
