Vote to Shrink Parliament is Latest Threat to Italy’s Government

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(Bloomberg) --

Italy is headed for a referendum designed to save lawmakers’ seats from downsizing, amid investor concerns over the government’s stability.

The reduction in the number of parliamentary seats from 945 to 600 would see lawmakers face dramatically steeper odds to get re-elected, prompting many to weigh party loyalty against personal prospects. After 71 senators signed up to demand a popular vote on Friday, according to Ansa news agency, a referendum is due in May or June.

Italian government bonds dropped and the 10-year yield climbed to its highest since August last month following the news that enough signatures had been gathered. Investors worried politicians might push for new elections early this year, before the referendum is held.

The looming vote could accelerate the realignment in Italy’s fluid coalition politics.

Drastically slashing the number of lawmakers was a key election promise of the anti-establishment Five Star Movement, the main party supporting Prime Minister Giuseppe Conte.

Five Star is hemorrhaging voter support and some 20 lawmakers have left the party since Conte’s new government was sworn in in September. Further departures could threaten the premier’s already thin majority in the upper chamber of parliament.

While an early election would offer current lawmakers a better chance of retaining seats than a later vote for a scaled-down parliament, it would also likely usher into power League leader Matteo Salvini and his center-right allies, based on recent opinion polls.

“I believe that it’s always best for citizens to express themselves, I’d do a referendum on everything, like in Switzerland every month,” Salvini told reporters Thursday on the campaign trail in the northern Emilia-Romagna region, a leftist stronghold he hopes to win in an election Jan. 26.

©2020 Bloomberg L.P.

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