Nomura On The Next 24-48 Hours In Italy

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The latest on the topic du jour: Italy.Nomura contributing economist Lavinia Santovetti has a quick one-pager on the imminent developments on the boot.

First, a key budget vote:

Tomorrow, or on Wednesday at the latest, the government will vote in the Lower House on the so-
called “Rendiconto di Stato” (Article 1 of the 2010 budget account, over which the government lost
a parliamentary vote on 12 October 2011). It will be a tough test, given that Mr Berlusconi‟s majority is
getting thinner. It currently stands at around 314, 2 votes below the 316 necessary to pass the bill.
However, there are around 15 MPs who have not yet decided how they will vote, so the vote hinges upon

If Berlusconi can’t get the votes, then he’ll call a confidence vote. If he loses the vote, then he must meet The President right away to dissolve parliament and form a new government. Even if he wins, he may meet with the President anyway to pave the way for a new election sometime early next year.

As for a new government it could look like this:

We believe that at this stage the only possibility is to form a new unity government headed by a “super-partes” personality, who should be able to give credibility back to Italy and press ahead with reforms. A technical government, headed by Mario Monti, looks the main possibility. Mr Monti would be highly supported by both the main oppositions parties, UdC and PD, and likely by many of Mr. Berlusconi‟s Popolo delle Liberta‟ MPs (who would support him only once the Berlusconi government had collapsed). A technical government headed by Mr Monti and supported by a large majority would be a positive step forward, in our view.  

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