>> Italian voters have just issued another warning to the European Project. With a majority of people backing Euro skeptic candidates, populism appears to have come out on top again. Reuters special Europe correspondent Noah Barkin says that's had an immediate impact on Italian bonds and banking stocks.>> And that's a reflection of fears that a new government could be less disciplined fiscally.
And could row back on the market friendly reforms the previous government had been trying to introduce. Italy is a country with a huge amount of public debt. When you have high debt, rising interest rates, and a government that investors don't trust, that's a very volatile mix.>> Who will end up governing Italy is far from clear.
With weeks of rangling between the anti-establishment, Five Star Movement and The Anti-Immigrant League. For Germany's Angela Merkel, the timing is unfortunate. She finally cobbled together a coalition deal over the weekend. After being punished at the polls last year over her own immigration missteps. Merkel could have been hoping to now pick up a joint push with French President Emmanuel Macron to reform and revitalize the EU.
But Italy's vote could hamper all that.>> The fact that Merkel is now on track to form a government, we expect a government to be in place, another grand coalition later this month. That increases the chances that we'll get some sort of Franco-German proposal to reform Europe. To reform the Euro zone, we're talking about moves towards closer economic integration, closer cooperation on defense.
Perhaps closer cooperation on immigration policies, but I think what the Italian election shows. And what also the results of the Austrian and Dutch election shows is that there is going to be a lot more resistance in Europe to any proposal that Macron and Merkel are able to come up with.