The likelihood of Italy holding a general election by the fall has increased considerably, according to a political risk analyst, as lawmakers moved closer to an agreement on a new electoral system.
"The biggest obstacle to early elections has so far been the lack of a workable electoral law… yet after months of dithering, it seems that the main parties are edging towards an agreement to endorse a German-inspired electoral system, using proportional representation with a 5 percent threshold," Wolfango Piccoli, a political risk analyst at Teneo Intelligence in London, said in an email.
Italy's four main political parties are set to begin discussions on the introduction of a new proportional voting system on Tuesday. The euro zone's third largest economy seems to be in favor of revamping its electoral system in order to mirror the so-called 'German model', whereby a 5 percent cut-off threshold would be introduced for smaller parties.
While an agreement on a new electoral system seems to increase the likelihood of a weak coalition that would struggle to enact domestic reforms, it could trigger snap elections before a tough budget accentuates anti-EU sentiment among Italian voters.
Should Italy's lawmakers reach a deal in June, it would effectively remove the biggest obstacle to the possibility of snap elections.
Piccoli suggested talks between the main parties had raised the prospect of an early election "considerably" and estimated there was now a 45 percent chance Italian voters would be required to return to the ballot box by the fall.