EU and Italy in turmoil after PM Renzi resigns following referendum defeat.
Matteo Renzi, the Italian prime minister, resigned late on Sunday night after losing a constitutional referendum. Italian voters have overwhelmingly rejected Prime Minister Matteo Renzi's proposed constitutional changes, raising questions over whether Italy will stay in the European Union and keep using the euro. The final result was: YES 40.89%, NO 59.11% Turnout was 65.47%.
Matteo Renzi staked his political future on his attempt to change Italy's cumbersome political system. He wanted to strengthen central government and weaken the Senate, the upper house of parliament.His opponents - including some within his own party - had argued that the reforms would give the prime minister too much power. The electorate agreed It was a resounding victory for the No camp, a medley of populist parties headed by the Five Star Movement, which capitalised on Mr Renzi's declining popularity, rabid pro EU stance, years of economic stagnation, and the problems caused by tens of thousands of migrants arriving in Italy from Africa. The risk of political instability in Italy, Europe's fourth largest economy, led to European stocksdecline and the euro fell to a 20-month low against the dollar, though it recovered somewhat later in the day, it still remains at a very low level.
EU leaders won't have slept much on Sunday night. Seeing how the next elections are expected to bring the populist anti Euro five star party and the and anti immigration "Northen League" into power. The result is being seen as a major blow to the EU, although the question of Italy following the UK out of the door is currently not on the table. Both Five Star and the Northern League are opposed to the eurozone and to the euro, but not to membership of the EU itself. In spite of the pressure from the opposition, early elections are thought to be unlikely. Instead, the president may appoint a caretaker administration led by Mr Renzi's Democratic Party, which would carry on until an election due in the spring of 2018. Finance Minister Pier Carlo Padoan is the favourite to succeed Mr Renzi as prime minister. Italian Prime Minister Matteo Renzi will go down in history alongside David Cameron. Like the former British prime minister, Renzi called a referendum in order to consolidate political power and — once and for a long time to come — silence opposition within his own ranks. Instead he ended up losing his job and plunging his country into uncertainty. Italy wakes up on Monday to the threat of a banking crisis, political turmoil, and a group of anti-establishment populists banging on the doors of government. Eurozone beware and EU be warned. Italy is the euro currency's third largest economy and it's in for a bumpy ride. And there are more unpredictable votes to come in 2017: in France, Germany, the Netherlands and perhaps here in Italy too.