THERE WAS a mixed market response yesterday to the nomination on Sunday night of life senator Mario Monti as the next prime minister of Italy.
Some €3 billion of short-dated Italian government bonds were sold at an average yield of 6.29 per cent, higher than the 5.32 per cent figure of last month but reassuringly down on the perilously high 7.73 per cent peak touched at the height of last week’s market storm. Furthermore, after a good start, the Milan bourse finished down by 1.99 per cent.
While many commentators chose to see yesterday's results as encouraging in view of the impending formation of Mr Monti's technocratic government, market analyst Gianluca Verzelli of investment Bank Akros told The Irish Timesthat it was probably too simplistic to assess yesterday's market results in terms only of the Monti government.
The market’s reaction to such a government, he suggested, will come much later when the government has taken office and introduced its first serious measures.
Meanwhile, man of the moment Mr Monti spent all day yesterday in an exhaustive set of negotiations with all the political parties. Those negotiations will spill over into today when the prime minister-elect will meet in the morning with the two biggest parties, the opposition Democratic Party (PD) and the People of Freedom party (PDL) of outgoing prime minister Silvio Berlusconi, who resigned last Saturday.
In the afternoon, Mr Monti will have equally onerous consultations with the trade unions. Given that pension reform as well as increased flexibility in the hiring and firing of labour may well form part of Mr Monti’s austerity programme, this will be a key meeting.
Likewise, union leaders are certain to want to know more about the significance of Mr Monti’s statement on Sunday night, when he said that his government’s mandate was to consolidate state finances yet at the same time promote growth, but to do so “with attention to social equality”.
Although media speculation continues to suggest that Mr Monti’s cabinet will be an exclusively technocratic one, comprising no parliamentarians, it emerged yesterday that this had not been the former EU commissioner’s original choice.
Representatives of those parties which met with Mr Monti yesterday all reported that he had made it clear he would have preferred to have had both majority and opposition figures in his cabinet but that, in the current tense climate, this was simply unrealistic.
Mr Monti also made it clear yesterday that he had no intention of accepting a mandate that came with a fixed term or expiry date but, rather, that he hoped to be able to lead Italy through to the end of this legislature, in the spring of 2013.
At the moment, with the exception of the Federalist Northern League, all the major players have said that, in the national interest, they will support his government.
The exact nature of that support is likely to become clearer following this morning’s consultations with the PD and the PDL.
If all of this goes according to plan, Mr Monti’s government could be in parliament by the end of the week for an initial confidence vote.