Neck and neck race as Italy goes to the polls

The centre-left forces of Pier Luigi Bersani moved ahead in the lower house of parliament and the camp of former Premier Silvio Berlusconi gained the upper hand in the equally powerful senate.

The upstart protest campaign of comic-turned-politician Beppe Grillo was also showing a strong result in both houses, confirming its role as a force in Italian politics.

The unfolding confused result raised the possibility of new elections in the coming months and bodes badly for the nation’s efforts to deal with its economic crisis. After surging in the wake of exit polls, Milan’s main stock index slumped with first projections before closing up slightly.

The election has been one of the most fluid in the last 20 years thanks to the emergence of Mr Grillo’s 5 Star Movement, which has capitalised on a wave of voter disgust with the ruling political class and harsh austerity measures imposed by technocrat premier Mario Monti – who has fared miserably in the elections.

The decisions Italy’s government makes over the next months promise to have a deep impact on whether Europe can decisively stem its financial crisis. As the eurozone’s third-largest economy, its problems can rattle market confidence in the whole group and analysts have worried it could fall back into old spending habits.

Mr Bersani’s coalition – which has shown a pragmatic streak in supporting the tough economic reforms spearheaded by Mr Monti – has taken 35.5 per cent of the vote for the lower house, ahead of the centre-right coalition under Mr Berlusconi with 29 per cent, exit polls indicated.

The poll by Tecne has a margin of error of plus or minus 2.5 per cent.

In the Senate, projections by the Piepoli Institute for RAI public TV showed Mr Berlusconi’s coalition slightly ahead with 31 per cent to Mr Bersani’s 30 per cent. Mr Grillo’s movement had 24.6 per cent and Mr Monti’s centrist forces 9.4 per cent. Sky’s Senate projections showed Mr Berlusconi with a two-point lead over Mr Bersani, and Mr Grillo with 25 per cent.

Given the uncertainty of possible alliances, a clear picture of a new government could take days, but it is all but impossible that Mr Bersani’s party would team up in a “grand coalition” with his arch-enemy Mr Berlusconi.

The former communist has reform credential has shown a willingness to join Mr Monti, if necessary, but he could be hamstrung by the left of his party. Mr Grillo’s surge shows Italians are fed up with painful economic cures.

Under Italy’s complex electoral law, how the upper chamber’s seats are allocated depends on how the candidates do in Italy’s regions, since the more populous regions, like Lombardy, get a greater share of the seats.

Whether the centre-left takes Lombardy might well decide if the coalition could stitch together a coalition with a workable majority in the Senate, as well as in the lower Chamber of Deputies, where the regional factor does not exist.

Mr Berlusconi, who was forced from office in November 2011 by the debt crisis, has sought to close the gap by promising to reimburse an unpopular tax.

Mr Monti, respected abroad for his measures that helped to stave off Italy’s debt crisis, has widely been blamed for financial suffering caused by austerity cuts.

Mr Grillo’s protest movement against the political class has gained in strength following a series of corporate scandals, but remains the wildcard in the pack.