Already a struggling nation, Italy now likely to be ungovernable

Adecade after the financial crisis Europe is still struggling to govern itself, and this morning’s Italian election results will only confirm that trend.

Pre-vote polls show no single party, or group of parties, able to secure a majority. Instead we can expect weeks, or even months, of horsetrading where none of the range of possible outcomes point to the kind of stable and reforming government that Italy so desperately needs.

Despite some recent progress with the balance sheets of its banks, Italy remains drowned in public debt at 130 per cent of GDP and crippled with slow headline GDP growth, poor productivity and endemic youth unemployment. These are the underlying factors that explain the Italian public’s disenchantment with both the EU and their own political class, and the upsurge of populist movements like Five Star and the stridently anti-immigrant League (formerly the Northern League).

The standard, complacent response is that the Italian public, having endured some 65 governments since 1945 and a host of recently appointed prime ministers, is well used to “everything changing, so that everything can stay the same”.

But the rise of Five Star – an internet-based party started by a stand-up comedian that is now comfortably Italy’s largest – and the resurgence of an anti-immigrant Right, headed by that ageing lothario Silvio Berlusconi, says otherwise. Consider that some 60 per cent of Italians are set to vote for antiestablishment parties.

Italians are angry, and if the polls are correct, they will show it by handing Matteo Renzi’s centrist Democratic Party (PD) a drubbing, mirroring electorates across Europe that are now rejecting the brand of Blairite centrism that seemed impregnable until a decade ago.

If Five Star performs above expectations and take 30 per cent of the vote, they could find themselves a full 10 per cent ahead of Mr Renzi, and perhaps double the vote share of Mr Berlusconi’s Forza Italia – and yet be locked out of government by their own refusal to build coalitions.

The prospect of an unholy alliance between Five Star and Matteo Salvini’s League party rightly fills the markets with dread, but another Left-right establishment stitch-up that keeps the same old establishment in place may not be much better. That will only stoke the anger of the disillusioned 80 per cent of Italians who feel that their vote counts for nothing.