The end of the political crisis and next steps for the new government:The new pro- European government looks to be willing to move in a different direction vs the previous one, with an agenda focused on green and socially inclusive policies. It is difficult to project how long this new coalition will last, but it will certainly have to address the next budget law. We expect to see some expansionary measures (lower labour costs plus investment spending), but without putting public finances at risk. However, the available room for manoeuvre is narrow.
Kasper ELMGREEN, Matteo GERMANO, Annalisa USARDI, Isabelle VIC-PHILIPPE
The appointment of Christine Lagarde as President of the ECB and Ursula Von der Leyen as President of the European Commission are undoubtedly among the best possible compromises, because these are two women of great experience, both very much in favour of strengthening the European Union.
Didier BOROWSKI, Isabelle VIC-PHILIPPE, Grégoire PESQUES
Political situation: On 13 January, Italia Viva – a minor coalition partner led by former Prime Minister Matteo Renzi – pulled out of the ruling coalition, leaving the government short of a majority in the Senate. However, we believe that snap elections are unlikely for now. In our view, the most likely scenarios are: Prime Minister Giuseppe Contecould seek to win a confidence vote,with support from parties both inside and outside the ruling majority and also unaffiliated lawmakers (Gruppo Misto);Conte could step down, triggering a new round of talksthat could eventually lead to a new administration, headed by Conte himself or another Prime Minister, with support from the same alliance; or a caretaker administration could be appointed to manage the government until the next election.
Matteo GERMANO, Sergio BERTONCINI, Isabelle VIC-PHILIPPE