Political instability to continue in Italy – ABN Amro

Following the resignation of the Draghi government of national unity in July, a general election will be held in Italy on Sunday, September 25. In the view of strategists at ABN Amro, Italy is heading for a right-wing coalition.

BTP-Bund spread to widen during and post-election results

“Polls for the election have persistently given a comfortable majority (of around 245 of the 400 seats in the lower house and around 120 of the 200 seats in the upper house) to a right-wing coalition, with the far-right Brothers of Italy led by Georgia Meloni as the dominant party in the coalition.”

“There seems to be a significant risk of infighting within the government, meaning that Italy’s long history of political instability could very well continue.”   

“We expect BTP-Bund spread to widen during and post-election results until the political uncertainty eases, which we do not expect to happen before at least H2 2023.”