In Italy Senate to vote on budget Wednesday

A map of Italy hangs on a wall near a voting booth at a polling station in Rome, Sunday, Dec. 4, 2016.

Brussels, Rome- Italian Prime Minister Matteo Renzi met with Italy’s President Sergio Mattarella on Monday to offer his resignation, but he was asked to stay until the country’s budget is approved.

“No” won an overwhelming 59.1 percent of the vote, according to the final count. Obama told Renzi that the relationship of the two countries was based on overlapping objectives on issues including climate change, the global refugee crisis, global security and fostering inclusive economic growth.

(Angelo Carconi/ANSA via AP).

European Union (EU) leaders are urging for calm after the Italian Prime Minister Matteo Renzi lost a referendum and resigned.

A few hours after the budget was passed on Wednesday, Mr Renzi returned to the Quirinal presidential palace.

Beppe Grillo, 68, comic and founder of the anti-establishment Five Star movement (M5S), is dining out on a win many analysts see as a rejection of traditional parties and politics.

With Mattarella due to begin talks with leading political figures, Renzi’s defeat has triggered speculation in Italy about his plans and the shape of the next government.

The 41-year-old Renzi, who was appointed to office in 2014, said Monday that he would resign and arranged to meet with the President after close to 60% of voters rejected his proposals.

“Renzi’s resignation is likely to lead to a period of higher political uncertainty which comes in the midst of ongoing recapitalisation efforts in the Italian banking sector”, said Nicola Mai, head of European sovereign credit research at PIMCO. He wants a government based on the outgoing majority, which remains intact in parliament.

Otherwise, he said, “the PD is not afraid” of early elections.

Some opposition forces have called for immediate elections, but this option appeared very unlikely.

“What we’ll have now is a compromise with an ambiguous government which at the start will present itself as a simple bridge government to take the country to elections in three or four months, but which could strengthen over time”, he said. After a year, Monti’s so-called technocrat government collapsed.

The law was changed to the so-called “Italicum” system previous year to give the leading party a parliamentary majority through bonus seats in the lower Chamber of Deputies.

In a tweet before meeting with his party, Renzi posted a note on his office letterhead reading: “Bye all!”

If a new government coalition is cobbled together, Mattarella would not have to dissolve Parliament and trigger elections so far ahead of their scheduled spring 2018 date.

Renzi will be most likely replaced by Finance Minister Pier Carlo Padoan, also a supporter of Renzi’s proposed constitutional reform.

But German Foreign Minister Frank-Walter Steinmeier said it was “not a positive message to Europe at a hard time”.

Investors had been anticipating Renzi’s defeat for several days, and had sold off Italian stocks and bonds.

This version corrects the spelling of Marine Le Pen’s name.