Borrowers' Pain May Be Opposition's Gain in Italian Election
(Bloomberg) -- In Italy, a country wracked by a series of banking crises, one of the best indicators of voting intentions may be loan default rates.
While the economy is picking up -- 13 straight quarters of growth and counting -- plenty of people have been left behind, including older unemployed and jobless youth. One sensitive bloc is made up of those who borrowed money for a car, home or small business but couldn’t make their payments.
Analysis by Bloomberg shows that last year defaults among families and small family businesses rose in 78 of the nation’s 110 provinces compared with the run-up to the last elections in 2013.
For Prime Minister Paolo Gentiloni and the strategists in his Democratic Party, that should set off alarm bells. The rates reinforce expectations reflected in most voting-intention polls that disenchanted voters may punish the party and reward opposition forces on March 4.
Back in the first quarter of 2013, when the country was still trapped in recession, the household default rate in the 10 provinces where the Five Star Movement got the best voting performance was 57 percent higher than the national average. The Democratic Party got its best results in provinces where the average rate was 14 percent lower than the average.
Other numbers also paint a less rosy picture of the economy than the headline data suggest. While Italian employment is close to a record high with the jobless rate down to the lowest since 2012, Bloomberg calculations showed earlier this month that almost six out of 10 jobs created in the past three years have been fixed-term contracts. That means less job security for workers, another source of frustration for the opposition to tap.
Roberto D’Alimonte, political science professor at Rome’s Luiss University and a top expert in electoral laws, says the increase in default rates gives households a “further reason to express a protest vote.”
On top of that are the lures of pre-election proposals such as the 23 percent flat tax put forward by ex-Premier Silvio Berlusconi or the “citizens’ income”-support measure from Five Star.
About 26.5 percent of Italian voters would back the Five Star Movement in elections, according to an EMG Acqua opinion poll for LA7 television network released on Monday. The center-right coalition is seen at 37.5 percent, while the center-left bloc including the Democratic Party got 28.7 percent, according to EMG.
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