Minus ten. The countdown to the vote for the new President from the Republic Italian scheduled for January 24 has officially started ei markets financial they look at this event for the first time with great interest. The reasons are various, the main one is that the most accredited candidate, namely Mario Draghi, currently occupies the role of prime minister and his move to the Quirinale could in the worst case scenario also lead the country to elections before the natural deadline set for 2023. A report by BG Saxo analyzes the issue.
The interest of investors
Usually it is a non event. But, this time around the election of the new president of the Italian Republic there is a interest greater. Sergio Mattarella, who is eligible for another term, will not run and will resign on 3 February. The current premier Draghi it is the leader who succeeds him. This would lead to early elections and a new period of political instability for Italy, at the worst time ever. This is certainly the first time in recent history that the Italian presidential elections are economically relevant. An event of potential risk for the financial markets.
The opening of Draghi al Colle
They are not here candidates officers Everyone elections presidential Italian. The parliamentarians of both chambers, together with the regional representatives, vote by secret ballot: they can vote for anyone as long as they are Italian citizens and aged 50 or over. In the past, names like those of famous people have come up. Election requires a two-thirds majority in the first round and an absolute majority in subsequent rounds if consensus is difficult to achieve. In recent months, Draghi has been launched as the lead partner. On 22 December he gave his availability for the first time.
The other candidates in the running
Others potentials candidates I am the current Minister of Justice and former judge at the Constitutional Court Marta Cartabia e three ex premier (Romano Prodi, Paolo Gentiloni and Silvio Berlusconi). Only Berlusconi is openly interested in the office. History teaches us that most of these names mentioned before the vote are there to be burned, with the exception of Draghi and perhaps Berlusconi who have an unparalleled ability to garner votes. The race is therefore wide open and potentially full of surprises.
The moves of the parties
Last week Giuseppe Conte, leader of the Five Star Movement which is the largest group in parliament, indicated his preference for one donna as the new Italian president. Cartabia, in theory. An achievement for a Parliament in which 65% of those elected are men. It is also a strategic move for Conte. According to the latest polls, his party would face a crushing defeat in the event of an early election. Two other parties are opposed to the Draghi option: Forza Italia’s Berlusconi and the League of Matthew Salvini. Others are undecided: Giorgia’s Brothers of Italy Meloni, Enrico’s Democratic Party Read and Italia Viva di Matteo Renzi. Most of Italy’s political leaders would prefer another option than Draghi. Investors would prefer Draghi to remain in office until the end of his term. But there is no consensus on another name for the moment. Fortunately, it is still early.
The merits of the premier
Draghi led stability policy in Italy. It is coping well with the health crisis and its consequences. It also completed the start of the complex project definition process and the achievement of initial objectives and reform objectives to access funds under the Next Generation EU recovery package. Italy is the largest beneficiary. It should soon receive the first payment out of a total of ā¬ 191.5 billion (both loans and grants).
A job to finish
But there is more to be done. Draghi has not yet had time to face the problems structuraleconomy Italian. The slowdown of the productivity is one of them. OECD data show that Italian companies with fewer than 10 employees, which make up a large chunk of the Italian business model, have lower levels of labor productivity than foreign ones. On average, the value added per employee in Italian companies compared to German companies is 35% lower in Italy than in Germany.
The future of the country
Some possible cause from the scarce productivity of Italy are the low level of spending on Research (1.4% of GDP in 2018 against 2.4% of the OECD average according to the latest available data) combined with insufficient investment in education and the delay in adopting new technologies. In this regard, the investments identified by the Italian government, which will be financed by the Next Generation EU recovery package, could represent a great opportunity to increase labor productivity growth. According to BG Saxo experts, implementing these investments will require political stability that only Draghi can bring.