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Is Berlusconi really set to lead Italy again?

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“He’s a very good performer, he has lots of favors he can call in, and he has huge resources, so I think he could do quite well,” says Professor James Walston, a political scientist at the American University of Rome.

Berlusconi said on Tuesday that he was hoping to rebuild a once strong but now-lapsed alliance with the Northern League, a populist and anti-European party that in the past campaigned for secession for Italy’s wealthy north.

Most analysts see the center-left winning the lower house of parliament, but give Berlusconi a fighting chance of blocking the Democratic Party’s hold on the Senate, the upper house.

That would enable him to exert significant control on parliamentary business and the passage of legislation.

... but a high risk

If “Il Cavaliere,” or The Knight, as Berlusconi is known, did manage to win the election, he is likely to roll back many of the painful and unpopular reforms initiated by Monti and his unelected administration of technocrats.

The election may not be for more than two months, but alarm bells started ringing on Monday, the first day of trading on the stock exchange in Milan, Italy’s financial capital, since the political drama that unfolded at the weekend.

Stocks closed down more than 2 percent and the spread between the yields on Italian and German sovereign bonds – seen as a key barometer of investor confidence – widened to more than 360 basis points, having been below 300 points before Monti’s resignation.

Fears that Berlusconi fails to grasp the dimensions of Italy’s economic malaise deepened on Tuesday when he said that worries about the spread were “an invention and a swindle” that had been wrongly used to bring down his government.

"Who cares about the spread?" the media mogul said. "The spread is a swindle and an invention which they used to defeat a government majority voted for by Italians that was governing the country.”

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