Macro Analysis /
Italy

Chart of the Week - Italy: Why early elections are unlikely

    UniCredit
    19 January 2021
    Published byUniCredit
    • The Italian government crisis has generated political uncertainty and, potentially, a period of political instability. However, we see early elections as the least likely outcome. We believe the current crisis will be resolved via the formation of a new government, without going to new elections. Our Chart of the Week shows one of the main reasons behind our view: indeed, at present, few political parties would be better off in the resulting new parliament, which will be a reformed one, where the number of seats would be substantially less than it is now (from 630 to 400 seats in the lower house and from 315 to 200 seats in the Senate). This is likely to discourage several parties from moving towards dissolution of parliament and early elections, and to encourage their efforts to form a new government in the current legislature.
    • The chart compares the current number of seats in the lower house and in the Senate occupied by the main parties in the current legislature with a projection in case the government crisis leads to early elections. The data in the chart are taken from the latest Ipsos simulation of the distribution of seats in a new parliament. This simulation is based on opinion polls conducted in the last quarter of 2020 and takes into account 1. that a new parliament will have fewer seats and 2. that its voting system would be the current mixed system, the Rosatellum.
    • Opinion polls are only a guide of voting intentions at a point in time and the result of early elections, if they happen, remains highly uncertain. Moreover, any final outcome will be strictly dependent on several unknowns, including, for example, political parties’ decisions in terms of alliances during the electoral campaign and any new parties on offer.
    • But the main message of the opinion polls is clear, in case of early elections, the Five Star Movement – which has been suffering from a significant loss of support since the general elections in March 2018 – Forza Italia and Italy Alive will likely be the big losers, with a projected reduction in the number of their MPs of between 60% and 85%. On the other hand, Brothers of Italy, which has benefitted from a loss of momentum by the League, could be a winner. It is projected that it might be able to double its number of seats in a new parliament, potentially making it the third-largest party in parliament after the League and the Democratic Party. With many parties facing losses and few expected winners (not least, with the pandemic still raging), early elections seem unlikely.