Italy’s populist talks increase chances of extremists in power

Bloomberg

Negotiations between the leaders of Italy’s two populist parties, ostensibly focussed on appointing speakers for the new parliament, are prompting conversations about a broader agreement to form the next government,
according to party officials. While Five Star’s Luigi Di Maio and the League’s Matteo Salvini work out how to allocate the key posts in the lower house and the Senate, the chances of a deal on governing are starting to rise, according to party aides who declined to be named discussing confidential talks.
A lawmaker for the League said Salvini’s coalition partner Silvio Berlusconi may open up to an alliance with Five Star despite his initial misgivings. La Repubblica newspaper reported that Berlusconi has told Salvini he isn’t ruling out governing with the anti-establishment group. A Five Star official said there is still only limited scope for a deal, due to the differences between the parties’ supporters. Italian bonds fell for the first time in three days, with the spread over 10-year German bunds widening by 2 basis points to 1.33 percent.
Five Star and the League have buried the hatchet after a bruising campaign as they set about carving up the first key jobs of the new parliament. While they are only at the start of a path that could lead to a populist government, the process of appointing the speakers, due to begin on Friday, will be the first sign of the balance of power after an
inconclusive election result.