November 13, 2018
Despite some recent failures, opinion polls have their uses if read correctly, meaning not just as a tool to confirm one's own entrenched biases. After a long period in which Italy’s Lega Nord has managed almost to double its support after each election, the Lega’s stratospheric ratings are now beginning to fall back to earth. An Ixe poll in the Huffington Post recorded a Lega fall from 30.7% previously to 29.8%, while Five Star is up from 25.9% to 27.1%. With the usual polling uncertainty, what this means is that the two parties are within each other’s error margins - in effect indistinguishable. There were other recent polls showing the Lega as high as 34%. It will be interesting to see what will happen to those.
The two parties together broadly maintain their support. This is not yet an anti-government sentiment. We have noted before that the strategy of the government - including that of disorderly conduct inside the monetary union - is not sustainable and is likely to meet its resolution at some point. This will eventually register in the polls, but much later.
For once, the economy is likely to disappoint in 2019, a development that will highlight the fundamental lack of sustainability of the country’s fiscal policy. One accelerator will be the rising interest rate. We note the lead story in Il Solve 24 Ore this morning, according to which Unicredit has raised its mortgage rates between 10 and 30 basis points for fixed-rate mortgages, and 20 basis points for variable-rate ones. This is poisonous for an economy that experienced a sharp economic slowdown recently.
Another factor weighing down on the coalition are the now permanent squabbles between the two parties, including over a high-speed train link in Northern Italy. Massimo Franco writes that anti-Europeanism is the only glue that holds the coalition together. We disagree somewhat with this statement. There is a broader anti-establishment sentiment in Italy that is not only about Europe, but the honeymoon period is clearly over.
The conflict between the two parties is partially overshadowing Italy’s foreign diplomacy, and specifically the Libya summit in Palermo which is an attempt by Italy to secure its commercial and security interests in its former colony. France and Germany are represented by junior officials. As Spiegel Online notes, this summit is another instance of European countries pursuing their own national interests. Emmanuel Macron earlier this year held his own Libya summit without Italy’s presence. The two countries have long had competing interests in the Libyan oil market.