Pier Luigi Bersani, the ex- communist and leader of Italy’s biggest political party, was given a mandate by President Giorgio Napolitano to seek lawmaker support for a new government.
“The mandate I am giving represents the first step,” Napolitano said today after meeting Bersani at the presidential palace in Rome. Bersani “is objectively in the most favorable position to search for a solution, though it may be difficult,” he said.
Bersani lacks a clear path to the parliamentary majority needed to install a government and implement a program of economic stimulus to pull the country from recession. The 61- year-old former industry minister, who controls the lower house, has struggled to entice rivals to give him the votes required in the Senate to secure him the premiership.
Bersani, speaking after his appointment by Napolitano, said he will “try to build a government that can generate the change that Italians have been waiting for and that will produce the necessary reforms that we haven’t been able to do until now.”
Italy is under pressure to come up with an administration as the 18-month recession drags on and the crisis in Cyprus renews speculation of a euro breakup. The Feb. 24-25 general election was inconclusive as the rise of Beppe Grillo’s euro- skeptic party upset the traditional balance of power and fractured the electorate into three blocks.
Bersani is seeking to replace Prime Minister Mario Monti, the former university president who was brought to power in November 2011 with an emergency mandate to impose fiscal austerity and shield Italy from the European debt crisis.
Bersani has been spurned repeatedly by Grillo’s forces and has refused to renew his alliance with former Prime Minister Silvio Berlusconi, leader of the second-biggest parliamentary force. Their defunct partnership burned the two leaders in the election as voters repudiated the budget rigor they enacted last year under Monti’s guidance.
“I think he will fail,” Marc Ostwald a strategist at Monument Securities Ltd. in London, said of Bersani’s chances at finding a parliamentary majority. “If he does fails, I think as long as there is some hope of a government of some sort able to do something, markets will happy to sit on the sidelines.”
Italian 10-year bond yields fell 6 basis points to 4.53 percent at 5:17 p.m. in Rome before Napolitano’s announcement. That’s 8 basis points more than the 4.45 percent yield on Feb. 22, the last trading day before the general election left Italy with a fractured parliament.
The next government inherits mounting unemployment and a $2.6 trillion debt load, which requires more than 30 billion ($39 billion) euros of bond sales a month to finance. The administration will also take responsibility for a country ranked next-to-last in the World Bank’s ease-of-doing-business survey of the Organization for Economic Cooperation and Development’s 31 high-income countries.
Italy’s next premier will seek to spur the economy by easing the austerity imposed by Monti, Bersani and Berlusconi. The European Union, in a nod to Italian voters, suggested this month that budget deficit rules could be relaxed. Cuts to payroll, income and corporate taxes and the elimination of property levies on primary residences were proposals pushed by various candidates during the campaign.
After easing the fiscal burden, the government will be called on to formulate a series of reforms to break the cycle of chronic recession that has plagued Europe’s fourth-largest economy for more than a decade. Italy needs to enact laws to speed lawsuits through the courts and ease restrictions on firing employees, economists have said.
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