Italian prime minister Mario Monti, speaking in Oslo, attempted to limit the market damage prompted yesterday by the spectre of further instability in Italian politics. Yesterday’s speculation was prompted by two key announcements last weekend, Mr Monti’s forthcoming resignation and the return of former prime minister Silvio Berlusconi to contest next February’s general election.
Market nervousness was instant yesterday, with the Milan bourse registering such an early negative trend that trading on a number of companies was suspended. By the end of the day, the blue-chip share index had fallen 3 per cent while bank shares such as Unicredit and Intesa Sanpoalo had fallen 5.1 per cent and 5.15 per cent respectively.
The spread between Italian and German 10-year government bonds, widely seen as an expression of investor confidence, rose to as high as 362 basis points before closing at 350 points, up from its Friday closing figure of 323 points. Intriguingly, one of the few share options to buck the negative trend were shares in Mr Berlusconi’s Mediaset company which closed up 2 per cent.
Overdramatised
At a press conference after the ceremony which saw the Nobel Peace Prize awarded to the European Union, Mr Monti argued that yesterday’s market reaction should not be “over-dramatised”, adding: “I’m confident that they . . . will produce a coalition or a government that will be totally responsible, oriented on Europe and coherent with the huge economic efforts made by Italy recently with its structural reforms ... ”
At that same Oslo meeting, European leaders were practically queuing up to express their solidarity with Mr Monti, with many expressing the hope that the next Italian government will honour the economic policies implemented by the Monti regime.
German chancellor Angela Merkel, who refused to take a question on Mr Berlusconi, confirmed she had “worked very well” with Mr Monti.
Political future
In Italy itself, most commentators take it for granted that Mr Monti will continue to have a prominent role in Italian politics after the election.
However, it remains unclear whether that role will be as head of a centrist coalition or as state president in succession to outgoing president Giorgio Napolitano, with centre-left leader Pierluigi Bersani as prime minister.
In an interview with Rome daily La Repubblica, Mr Monti said he had no option but to resign after Mr Berlusconi’s PDL party withdrew its support for his non-elected, technocrat executive. Asked about his intentions, he said: “I don’t know, I really don’t know. If I were to tell you candidly how I feel today, I would say that I am very worried ...”
Another to express his approval for Mr Monti was the president of the Italian Bishops Conference, Cardinal Angelo Bagnasco, who recalled how Mr Monti had saved Italy from a “humiliating” collapse a year ago, adding: “What leaves one aghast is the irresponsibility of those who can only think of saving themselves as the house burns down.” Ironically, for much of his time in public life, Mr Berlusconi has been able to count on the support of the church.