Italy’s designated prime minister Matteo Renzi was scheduled to start talks with party leaders yesterday in a bid to win their support for his political program.
The 39-year-old Democratic Party leader, who received a mandate from Italian President Giorgio Napolitano on Monday to form a government, pledged to overhaul Italy’s labor market, modify the tax code and change the country’s election law in the first 100 days of his administration.
While Renzi may have a better chance of success than former Italian prime minister Enrico Letta in rewriting the electoral code, simplifying labor laws “will be challenging, as he still faces a divided parliament where his party does not have a majority in the Senate,” Alberto Gallo, head of macro credit research at Royal Bank of Scotland Group PLC, wrote in a research note on Monday.
Renzi must assemble a coalition that can win confidence votes in both houses of parliament. While his Democratic Party, known as the PD, and its allies have a majority in the lower house, the support of moderates and conservative parties will be crucial for Renzi to secure the Senate, where the PD has just 108 of 320 seats.
In particular, Renzi may have to win over the 31 senators elected with the New Center-Right party of Angelino Alfano, who broke with former Italian prime minister Silvio Berlusconi’s conservative People of Liberty party last year and became a junior partner in Letta’s coalition.
While Alfano has not ruled out supporting a Renzi government, he has made clear that he would refuse to support an administration that was “too leftist.”
Renzi, who would be the youngest prime minister in Italian history, on Monday said that discussions to form a stable government that can survive until the end of the legislature in 2018 may take “several days.”
“Renzi is perceived to be committed to implementing a speedy reform program and he has often shown himself ready to make quick decisions,” Annalisa Piazza, senior fixed-income strategist at Newedge Group in London, said in an e-mailed note.
Wolfango Piccoli, managing director at Teneo Intelligence in London, said divisions within Renzi’s party, as well as budget constraints and a slim majority in the Senate may hamper his 100-day agenda.
“Expectations of sweeping reforms should not be overstated,” Piccoli wrote in a research note on Monday.