Italy did not disappoint. Voters rejected the way the euro is being managed led by German Chancellor Angela Merkel–and shared by her political contender, the SPD candidate Peer Steinbrück, too.
Ignoring that Italians have given support to political programmes contrary to current austerity policies (the winner Five Stars radical party and Silvio Berlusconi’s coalition obtained 56.2% of all ballots) would be a temerity. Indeed, it brings an opportunity for Merkel to rethink her tough fiscal measures, which were implemented in Italy by former prime minister Mario Monti, who won less than a third of any of his main adversaries’ votes.
The message was loud and clear, and comes from a country that helped to found the European Union and create the common currency region, in which it sits as the third biggest economy. Brussels and Berlin should pause and have another look at their imposing suffering, almost to the extenuation point, to millions of citizens in the euro periphery.
In the short term, though, analysts will talk of market volatility and the improvement of the Spanish spreads against Italy’s, and the uncertainty over the political future of the Italian republic. Economists will note that the country’s fiscal and external deficits have experience a sound correction. Political commentators will say that the level of disaffection among voters is disturbing and could slow down the completion of the reform agenda, while making more difficult the path towards European integration.
Even though the German national elections will be held next September, Berlin should not wait until then to hint at a course change. Chancellor Merkel needs work out a balanced mix of macroeconomic policies and stimulus that push Europe into growth again, generating jobs and business opportunities for all.
In Paris, prime minister François Hollande appears to be ever more willing to strengthen the pro-stimulus bloc. Hollande is aware that the future of the euro and the European Union must be discussed after the Italian warning.