Italy Inc. Votes for Gentiloni to Stay as Premier After Election

EghtesadOnline: Many of Italy’s business leaders have decided who should be the country’s next prime minister -- the current one.

News ID: ۷۴۵۰۰۰

15 February 2018

These chief executives, who lead companies worth more than 338 billion euros ($422 billion) on the Milan stock exchange, view Paolo Gentiloni as the best choice to lead the country after the March 4 election. Their second preference would be a moderate candidate chosen by Silvio Berlusconi’s Forza Italia party.

Bloomberg News asked CEOs of the 40 companies in Italy’s benchmark FTSE MIB index to pick their preference among the following group: Gentiloni or another member of the Democratic Party, a Berlusconi candidate, Northern League leader Matteo Salvini and Five Star Movement head Luigi Di Maio.

All 17 of the CEOs who responded anonymously to the survey or made public comments chose Gentiloni as the best option to lead the euro region’s third-largest economy. Their second choice was Berlusconi’s eventual candidate, followed by Di Maio. None of the CEOs expressed a preference for Matteo Salvini, head of the Northern League party that’s part of the center-right bloc.

Current polls suggest none of the three coalitions would obtain a parliamentary majority, though some show Berlusconi’s group getting the biggest bloc in the next government with about 37 percent of the vote. The anti-establishment Five Star would be the largest party with 28 percent, while former premier Matteo Renzi’s Democratic Party is trailing with 22 percent, according to a poll Istituto Ixè published on Feb. 7.

That makes a hung parliament the most likely scenario, although few executives expressed any concern about the prospect. Carlo Messina, CEO of Intesa Sanpaolo, Italy’s biggest bank by market value, is confident that Italian President Sergio Mattarella will "for sure deliver the best solution for the country," he said in an interview with Bloomberg TV Feb. 8.

Messina doesn’t expect severe market disruptions because whatever government emerges after the vote should be in a position to address the country’s top two priorities, reducing public debt and youth unemployment.

Entrepreneurs Sanguine

Frenchman Jean Pierre Mustier, CEO of UniCredit SpA, the country’s No. 2 bank by market value -- who will not be voting in the election -- said entrepreneurs are sanguine. "The feeling is that the situation is improving and that the election could only have a minor impact."

While Gentiloni’s government can boast about continued growth as proof that its policies are working, the pace of expansion slowed in the final quarter of 2017, leaving it lagging behind France and Germany as the country heads to the vote.

If the center-right fails to gain a majority in parliament, Berlusconi has said he’d be willing to allow Gentiloni to stay on until a new round of elections. If his bloc emerges victorious, Berlusconi has proposed European Parliament President Antonio Tajani to form the next government.

With Five Star’s Di Maio and Salvini placing third and fourth respectively in the survey, the message from CEOs is they would prefer leadership come from the establishment parties.

European Champions

“Every country has a challenge and this is to overcome populism, to build European champions in several industries," Telecom Italia SpA Chairman Arnaud de Puyfontaine told reporters at a Jan. 31 conference in Milan.

The 31-year-old Di Maio has courted investors in London and Milan recently. He vows to cut corporate taxes, make it easier to hire staff, promote small and medium-size businesses and provide a “basic income” for individuals. The centerpiece of Berlusconi’s economic platform is a flat tax for both companies and individuals, while Renzi is promising to boost annual growth to more than 2 percent a year and reduce the debt to gross domestic product ratio over the next decade to 100 percent from about 132 percent now.

Giovanni Castellucci, the CEO of toll-road and airport manager Atlantia SpA, doesn’t foresee a sharp change in economic policy no matter who guides the next government. “Here’s my message to Italy: politicians are not free to do as much as they want, and this is good news,” he said at a Milan conference last month.

“Whatever the outcome from the elections, the final policies will not diverge so much."