The concerns Over Europe’s debt crisis renewed and triggered by Italy’s inconclusive election as recession-scarred
voters repudiated budget rigor and established former comedian Beppe Grillo as
a political force.
In the four-way race, pre-election favorite
Pier Luigi Bersani won the lower house by less than a half a point. Silvio
Berlusconi, the former premier fighting a tax-fraud conviction and charges of
paying a minor for sex, called for a recount and won a blocking minority in the
Senate. In its first national contest, Grillo’s group got more than 25 percent
support.
“The political situation across Europe is
effectively a race between austerity and reforms on the one hand and the rise
of populist movements on the other,” said Alberto Gallo,
head of European macro credit research at Royal Bank of Scotland Group Plc.
“Austerity is painful, and if reforms are not implemented in time, you run the
risk of social unrest and populism. It hasn’t happened so far in Greece, it
hasn’t happened in Portugal or Spain, but we are very close in Italy.”
Berlusconi and Grillo, the candidates running
to reverse the austerity implemented by incumbent Premier Mario Monti to
contain the region’s financial crisis, scored about 55 percent of the popular
vote. The euro fell to a six-week low, Italian bonds declined and U.S. Treasury
notes rose as the results trickled in.
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