Mattarella Re-Election Provides Boost For Political, Market Stability

Over the weekend, incumbent President Sergio Mattarella won re-election to a second seven-year term in office after one of the longest presidential election processes in Italian history. Despite having strongly objected to the prospect of a second term, Mattarella became the only acceptable compromise candidate for the parties involved in the broad coalition gov't of PM Mario Draghi.

• As has been noted by a number of outlets, Mattarella's re-election is the most positive outcome with regards to political stability over the medium term and for promoting market-supportive reforms from the gov't of PM Mario Draghi.
• Mattarella - the second president to be elected to a second term - is only likely to serve a portion of his term. The mid-2023 general election would seem the logical end-point for his tenure. Draghi would be the top contender to take over from Mattarella, with the election serving as a natural end-point to the PM's technocratic administration.
• Keeping the same two leaders in the Quirinale and the PM's office provides an indication of much-needed stability. It should be noted, though, that the extreme difficulty with which a compromise was reached between parties during the presidential election could prove a signal that relations between the various ideologically-opposed parties within the Draghi gov't are becoming extremely frayed.
• Focus now turns to the Draghi gov'ts plans for the use of EU COVID-19 recovery funds, set to be disbursed later this year. The actions of the right-wing populist League will also need to be watched closely. For some time speculation has been that party leader Matteo Salvini could withdraw from the Draghi gov't in an effort to force an early general election and bring a right-wing coalition to power.