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Q: So now the elections are under way, what are investors afraid of?
A: Italy's Byzantine election laws could mean many different outcomes. The worst result would be no party or coalition being able to form a government, leading to new elections.
Researcher Vincenzo Scarpetta at the Open Europe think tank says the probability of this is "very low" but that re-run elections could mean "potentially, huge market pressure, which Italy can hardly afford." This pressure would come in the form of rising interest rates on government debt.
Another possibility could be a parliament so divided that it can't govern effectively, or a shaky coalition of parties with clashing agendas — meaning that any policies would be the result of endless compromise and back-room deals. A badly split parliament "would surely affect investors' confidence as Italy's political future would remain unclear," said Aul and Ashley.