Italy faces political, economic uncertainty after referendum

The referendum rejection of his signature constitutional reform plan – meant to strengthen his hand and defuse rising establishment-bashing movements across the West – had the opposite outcome. “I believe in democracy, and when you lose, you can not pretend that nothing has happened and go to bed”. But I lost and I say it loudly.

He added: “But at the end of the day, the name itself is not going to make a huge difference – this is going to be a short-lived caretaker government with a very narrow mandate”. “The post that gets eliminated is mine”.

And if Italy falls into a financial crisis, panic could quickly rip across the bloc, experts warned. But the financial world bounced back by morning. In a worst case, they say, that could see the country falling out of the 19-country eurozone.

While Renzi tried to play the part of the young, forward-looking leader, his detractors pointed out that numerous proposed changes were poorly drafted and would not address the pressing issues facing Italy.

But Italians were not thinking about the European Union as they went to the polls Sunday.

Anti-referendum militants gather in downtown Rome after Italian Premier Matteo Renzi conceded defeat in a constitutional referendum and announced he will resign in Rome, early Monday, Dec. 5, 2016.

His opponents – including some within his own party – had argued that the reforms would give the prime minister too much power. Voters seemed less interested in the technical issues and more motivated by the grim economic outlook.

Mr Renzi’s plans to rein in the power of the Senate was defeated by 59.1 per cent to 40.9 per cent, according to the final tally.

The anti-establishment Five Star Movement of comedian Beppe Grillo was joined by the far-right Northern League, the socialist Italian Left and the nationalist Brothers of Italy. The movement’s five stars stand for “public water, sustainable transport, sustainable development, the right to Internet access and environmentalism”.

“The vote was transformed into a vote on himself and his government”, she said.

“The experience of my government ends here”, he said. While UKIP’s Nigel Farage became a fast friend of Trump’s, the Conservative Daniel Hannan, another pro-Brexit British politician, called Trump’s rise a danger to the Republican party and American democracy and rejected parallels between Trumpism and Brexit as “absurdly overdone“.

Change is extremely hard in what is essentially a very conservative system that guarantees the status quo for all parties – from left to right.

The Milan Stock Exchange opened down 2 percent, but many bank shares were suspended due to excessive volatility meaning the hit could be even deeper. Mattarella will consult with party leaders before naming a new prime minister – the fourth successive head of government to be appointed without an electoral mandate, a fact that underscores the fragility of Italy’s political system.

The party is expected to have a leadership meeting in the coming days to determine the way forward. The likes of the Five Star Movement have understood how to capitalise on the growing tendency in this previously pro-European country to blame the European Union for austerity and society’s ills. Reaction so far has been fairly mild but should the prospect of instability in the eurozone’s third-biggest economy move the markets significantly, he suggests the front-runner is Finance Minister Pier Carlo Padoan, a close ally of President Matterella who is largely respected by investors.

“Europe in 2017, we all know, will be a disaster”, said Giovanni Orsina, a political scientist at the Luiss University in Rome. “Tomorrow we start working to create the platform and the team of the future 5-Star government”.

Renzi’s emotional, midnight resignation announcement sent the euro lower and jolted stock and bond markets on concerns that early elections could follow, possibly paving the way for an anti-euro party, the 5-Star Movement, to come to power.

While Italy’s opposition parties were united in antipathy for Renzi’s policies and reform course, they have little else in common and have already begun vying to position themselves for a new election, although the timing of any vote remained unclear.