Italy's 5-Star Movement voted over the weekend in favour of a proportional electoral system, raising the chances of an unprecedented autumn parliamentary election.
On Sunday, 5-Star's supporters overwhelmingly backed a proportional law modelled on that of Germany, in which parties must win at least 5 percent of the national vote to get into parliament. It called for a national election on Sept. 10.
That means Italy's four most popular parties, including the ruling Democratic Party (PD), have now signalled a willingness to support a voting law based on proportional representation (PR).
Italy must hold an election by May of next year; it has never had a parliamentary election later than the month of June. In addition it must present a budget with an estimated 17 billion euros ($19 billion) in spending cuts or extra revenue in October, and pass it by the end of the year.
President Sergio Mattarella, who is the only figure with the power to dissolve parliament, has insisted that a new voting law must be adopted before calling an election, because currently there is a discrepancy between different systems for the two houses of parliament.
For an autumn vote, he may also demand a budget agreement among the main parties, a source said.
"There's a budget to pass, but if the (electoral law) agreement holds, I believe there will be an election in the autumn," a source close to the president said on Monday.
The willingness of all the major parties to vote on a new electoral law "makes an autumn vote more probable," a government source also told Reuters, "but things will be more clear in 10 days' time".
An early vote would allow the ruling Democratic Party (PD) to avoid taking full responsibility for the 2018 budget, and could hand a new government a mandate to tackle the country's chronic growth problems, shore up its struggling banking sector, and push for more help to manage the ongoing migrant crisis.
Italian stocks fell more than those in other European markets on Monday due to worries over an early vote. Polls show a PR system would not produce a clear winner, and post-vote alliances look unwieldy.
The centre-left PD and anti-establishment 5-Star are neck-and-neck at 30 percent, polls show, while the only other parties that would make it into parliament with a 5-percent minimum threshold would be the far-right Northern League and Silvio Berlusconi's centre-right Forza Italia.
While the PD has continued to push for a first-past-the-post system, its leader, Matteo Renzi, said on Sunday that a proportional system could be "a step forward to get out of the swamp" and hold an early election. ($1 = 0.8946 euros)