Parties May Struggle To Form Government In Italy
Holger Schmieding, chief economist at Berenberg Bank in London, said the mere prospect of facing the bond market without the ECB's implied backing could put pressure on politicians to sort out their differences, especially with a nudge from the European Union's executive commission and eurozone heavyweight Germany, the architects of austerity as a strategy for getting Europe out of its financial mess.
"We would expect the ECB, Brussels and Berlin to emphasize that the safety net would be available for an Italy that gets its act together," he said in a research note to investors.
"If tensions escalate, this could help to concentrate minds on the center-right and the center-left in Italy to form some kind of coalition and pursue sensible policies."
____McHugh contributed from Frankfurt, Germany, and Juergen Baetz from Brussels.
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