Grillo rejects cooperation with Bersani’s centre-left coalition

Ben Southwood
Follow Ben
THE ITALIAN political crisis deepened yesterday as ascendant maverick Beppe Grillo rejected centre-left offers of informal collaboration.

Centre-left leader Pier Luigi Bersani, who commands a majority in the lower house of the Italian parliament, had made overtures to Grillo’s Five Star Movement, suggesting collaboration.

But Grillo snubbed the idea, calling Bersani a “dead man talking” on his blog.

On the same day, Bersani’s deputy Nichi Vendola ruled out the possibility of an alliance with former premier Silvio Berlusconi’s centre-right grouping.

But further gridlock in Italy could not weigh any further on already depressed markets, and the Euro STOXX 50 recovered 1.6 per cent and the FTSEurofist 300 rebounded 0.9 per cent.

Meanwhile the euro came back 0.44 per cent on the dollar, bringing it to $1.311, 0.64 per cent on the yen and 0.34 per cent on the pound, despite the worsened political stalemate.

Even yields fell back nine basis points – or 1.76 per cent – which narrowed the spread against equivalent German bunds from 345 basis points to 336.

Italian political figures have been sensitive about perceived ridicule from countries around the world, with current President Giorgio Napolitano pulling out of a dinner with the German shadow chancellor after he described Berlusconi and Grillo as “clowns”.

The comedian anti-establishment figure’s 25 per cent of the vote – given his support for effectively defaulting on Italy’s national debt, and slashing the work week to 20 hours – was a major feature and shock of the election to outside observers.

This is especially true when combined with the remarkable success of evergreen Berlusconi – who was ousted in 2011 in the midst of various accusations made against him – and with the drastic failure of current Prime Minister Mario Monti, the EU and market favourite, who only won around a 10th of the vote.