London- New Italian Prime Minister Mario Draghi is now bringing transformation in the political scene in Rome and causes stock markets to surge.
During the rise of the fresh political chaos, it is the former European Central Bank president who called upon to become a part of Italy’s new leader and rescued its turbulent economy. Undoubtedly, his arrival has been best described as “better than expected” after the gathering of widespread political support and stemming the threat of populist forces.
Erik Nielsen, a group economist at UniCredit explained in a research note on Sunday, “This is the best possible outcome, and better than I had expected, because it provides a degree of stability and political accountability.”
Moreover, Draghi has now managed to receive backing from the major political forces in Italy. Draghi also followed the concerns that a pure technocratic team which would have a short life span. Well, the next general election is supposed to be held in early 2023.
By assuring the wide political backing and diverse team, Draghi has improved the outlook of Italy. Now the Analyst has become even more bullish on Italian government bonds, stating “expectations of a more efficient use of the NGEU (Next Generation EU) funds, structural reforms and a better outlook in terms of vaccination,” as per UniCredit note.
During this time, Italy’s main share index has soared more than 7% from the starting of the month. Barclays analysts believed that in the second half of the year, economic growth will pick up. On Monday, in a note he mentioned “The return of Mario Draghi, now Italy’s Prime Minister, has changed the political landscape dramatically.”
Moreover, they have explained that the winter from the month-long political crisis has now appeared to be the anti-immigration Lega party. Previously, the more centrist PD had opposed the joining forces with Lega and their unity has created tensions within the party. In the meantime, The other major party, the Five-Start Movement, seen internal division while approving Draghi’s premiership last week.
Dormant populism
Notably, this could shift the picture in Italian opinion polls. Lega is the most popular political party with around 24% of public support. On the other hand, the Five-Star Movement and PD that formed the previous government could be facing a setback. PD has enjoyed 20% of public support in January and lost one percentage point in a poll released on Feb 11.
At the same time, Draghi’s arrival has now dampened populism rhetoric for now.
Lorenzo Castellani, a historian at LUISS Guido Carli private university, told a news reporter last week, “Today what we can say is that populism is weaker in Italy both for the intervention of Draghi and the intervention of the pandemic and European integration.”
In the wake of the 2018 general election, Italy had two main populist forces Lega and the Five-start Movement. Currently, they have grown anti-EU stance now as per Erik Jones, a professor at Johns Hopkins University. He also added, “The Five-Star Movement made its pivot when it supported Ursula von der Leyen (European Commission president) in June 2019; the Lega made its pivot when it decided to support Draghi in forming an openly pro-European government of national unity last week.”
