Italy: It’s all about the politics – BBH

Research Team at BBH, suggests that in an otherwise quiet news stream, they note that the deputy speaker of Italy's Chamber of Deputies and one of the leaders of the opposition 5-Star Movement stirred the pot. 

Key Quotes

“Di Maio broke ranks with officials in Europe to say that the UK should be given market access and migration controls.  He would naturally say this as he and the 5-Star Movement want to have a referendum on EMU membership.  The better the deal the UK gets, the more compelling of a narrative he can offer.  And this is precisely why a hardline is being sought. 

In terms of domestic politics, De Maio argued that if the referendum loses, Renzi must resign.   This strikes us as simple partisan politics.  Di Maio is quoted on Bloomberg:  "I am sure that Italians will ask him to maintain his promise despite the fact he has changed his mind."  What we noted earlier still strikes us important.  The referendum does not change party representation in parliament.  It would be difficult for Di Maio and the opposition parties to force Renzi out. 

Meanwhile, the 5-Star Movement won the mayoral contests in Rome and Turin.  The former is a bit of a poison chalice in the sense that it is thought to be an exceedingly difficult task, and it is proving itself so now.  Italian assets are mostly outperforming Spain today.”