Italy’s anti-establishment groups surged in Sunday’s election as voters punished the mainstream parties for years of economic decline, rising taxes and a wave of immigration, casting doubt on the country’s future political direction.

Projections based on ballot-counting on Monday morning suggested the two forces with the most gains, the euroskeptic Five Star Movement and the anti-migrant League, could reach a majority in at least one of the houses of the Rome-based parliament should they join forces. The two parties could have a majority of about 345 seats combined in the 630-strong lower house, according to projections from RAI television.

That would first require the League to break its electoral pact with the other center-right parties. After that, weeks of horse-trading would be needed before a new government could be appointed, creating uncertainty in markets throughout the European Union.

The center-right coalition backed by ex-premier Silvio Berlusconi, 81, and including the League was the single biggest group, according to early projections. But his bloc was forecast to only narrowly defeat Five Star, whose leader Luigi Di Maio, 31, exploited widespread anger at a ruling class often tainted by corruption scandals to become the biggest single party in parliament by a large margin. “Di Maio victory, Italy ungovernable,” summed up the Turin newspaper La Stampa.

A government led by the Five Star leader “would make it difficult for the European banking union to be completed in the short term, as it would go against a number of rules that the German-French bloc sees as necessary for it,” said Nicola Nobile, a senior economist at Oxford Economics in Milan. “As far as the European economic integration is concerned, this result makes the process even slower than it already was meant to be.”

Pro-EU parties have managed to contain populist insurgencies in German, French and Dutch elections over the past twelve months, but in Italy their defenses were exposed with the economy barely larger than it was when the euro was introduced almost two decades ago. The 2016 refugee crisis, which saw Italy on the front line, offered a second line of attack. The upshot is a far more unpredictable partner for European leaders such as Angela Merkel and Emmanuel Macron as they face the threat of a trade war while trying to reform the bloc.

The euro dropped 0.24 percent to $1.2287 as of 7:49 a.m. Rome time after earlier rising as much as 0.4 percent.

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“The Five Star Movement will be pivotal for any potential government,” said Silvia Merler, an analyst at the Bruegel think tank. “Will they prove responsible? Will they choose to open talks with the Democrats or with the Northern League? Italy’s economic future in the short term depends on that.”

Another layer of uncertainty was introduced when Berlusconi’s Forza Italia party was overtaken by its main ally, the League led by Matteo Salvini, whose anti-immigration message helped spread his party’s appeal from the rich industrial north to the depressed south. This looks to have wrecked the media mogul’s hopes of playing the kingmaker by flagging a premier if his party won more votes than the League.

“What markets should feel is a slight tremor of hesitation at Five Star’s relatively high score, but I think what they will take away and absorb is the strong sense that Italy has a hung parliament,” said Erik Jones, professor of international political economy at the Johns Hopkins University in Bologna.

Once the results are in later on Monday, attention will shift to President Sergio Mattarella, who is charged with handing out the mandate to govern. He is unlikely to opt for the center-left Democratic Party of former premier Matteo Renzi, one of the night’s main losers after sliding to some 20 percent from more than 40 percent of the vote in European elections in 2014.

Ettore Rosato, head of the PD group in the lower house, said that if initial exit-polls were confirmed, “we will go to the opposition” — costing Prime Minister Paolo Gentiloni his job and quashing speculation of a possible grand coalition with Forza Italia, the option favored by investors and Italy’s European Union partners.

Instead, they now face the prospect, albeit slim, of a populist alliance gaining significant sway over the euro area’s third biggest economy, potentially posing a challenge to French and German plans for European integration and turning Italy firmly against refugees.

Corriere della Sera reported on Monday that Gentiloni may replace Renzi as leader of the Democratic Party after its slide. Another possible name is Walter Veltroni, a former mayor of Rome. Renzi was quoted by the Milan-based newspaper as saying the PD will go into opposition, and reject any approaches from either Five Star or the center-right.

Although Di Maio and Salvini each ruled out an alliance during the campaign, their stances could change in the maneuvering that follows the election. Salvini said in October that if the center-right didn’t win a majority, he’d call Five Star co-founder Beppe Grillo.