Rome: While Europe watched and prayed for stability in the eurozone’s third largest economy, Italians on Sunday voted in what is being termed as the country’ most important election for this austerity-stricken generation.
Popular opinion swayed in favour of centre-left Democratic Party leader Pier Luigi Bersani, with analysts saying he may fall short of a majority and need to form a coalition alliance in search of stability.
In a recession-struck economy with unemployment at a 20-year-high, Bersani promised Italians growth and jobs, but said he would stick to Mario Monti's budget discipline.
Opinion polls suggested that popular comedian Beppe Grillo's anti-establishment movement could throw up some surprising results.
Earlier on Sunday, there was commotion when Silvio Berlusconi came to vote in Milan and three topless feminists with "Basta Berlusconi" ("Enough With Berlusconi") written on their backs hurled themselves towards him.
Berlusconi resigned after high borrowing costs, fed by fears Italy would not pay its debts, threatened the country with financial ruin and rattled confidence in the eurozone.
Italy's political parties installed Monti, a former EU commissioner and academic, as prime minister to lead a temporary crisis government of financial experts in November, 2011.
Monti set about easing some of Italy's anti-business practices, such as labor laws that made it extremely difficult to fire long time workers. He reduced the budget deficit with the help of an unpopular tax on homes.
There are fears that a new government and prime minister could weaken or scrap the economic reforms and budget cuts begun by Monti.
Nonetheless, a new Italian government that rejects reform "will lead to more uncertainty, higher yields and a gradual process toward the situation we had last year," says Carsten Brzeski, an analyst at ING in Brussels.
Italy's economy — the third-largest among the 17 European Union countries that use the euro — has only grown less than a half percent a year on average for a decade. That is compared to 1.25 percent in other rich industrialized countries. Faster growth is needed to shrink Italy's mounting debt burden, which already equals 127 percent of its annual gross domestic product.
Because of its size, Italy's problems can dent market confidence in the whole eurozone. Doubts about Italy's ability to manage its debt caused markets to question whether the euro could survive in 2011-12.
With Agency Inputs
First Published: Sunday, February 24, 2013, 09:50