According to TD Securities analysts, it appears Italy will head to early elections after Salvini and Di Maio both confirmed they are ready and will not try to salvage their coalition.
Key Quotes
“The logistics here are extremely tight, however. President Mattarella can now take all the time he wants to see if an alternative coalition can be formed, which is very doubtful. If not, he must then set new elections for 45-70 days from that point. However, Italy very likely needs to have a new government in place before Oct 15, the deadline to submit their draft budget to Brussels. This should mean an extremely tight deadline of elections the last week of September or first week of October.”
“Polls suggest a significant gain for Lega and loss for M5S, but no part with an absolute majority. The odds are higher though than we end up with a new government entirely composed of the right-wing, lead by Lega. While EUR and Italian assets have taken this poorly, it would actually seem more likely this can spur more stability and less spending in the new government than at present, given he need to not please two parties with very different budget priorities.”
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