The European Union suffered another blow today after Italy’s pro-EU prime minister resigned following a heavy referendum defeat.
Anti-establishment populist movements are gaining traction in Europe and around the world – and the very future of Brussels may now hang in the balance.
The value of the euro plunged today and experts warned the conflict-hit single currency could fall further as investors spooked by a long-running banking crisis in Italy and the possibility of an election that could usher in parties anti-EU.
Matteo Renzi kept his promise to step down after his bid to change the constitution was overwhelmingly rejected in Sunday’s poll, sparking fears over the future of one of the eurozone’s biggest economies.
“Its defeat to populist movements will cause concern for the rest of Europe,” said Yunosuke Ikeda, chief currency strategist at Nomura Securities in Tokyo.
Last month Donald Trump won the US election and in June Britain voted to leave the European Union. Both were seen as rejects of the establishment.
Yannick Naud, head of fixed income at Banque Audi (Suisse) SA in Geneva, told Bloomberg News: “There is now a possibility that the euro will reach parity with the dollar. following, but it is a possibility if there is certainty regarding the new elections.”
The news sent the euro crashing to $1.0506 (83p) at one point, its weakest since March last year, before rising slightly. Asian stocks also fell this morning as the political unrest unfolded.
Italian voters have overwhelmingly rejected the proposed reforms on which the prime minister has staked his political future.
Renzi’s defeat and his impending departure from the vanguard of Italian politics are expected to plunge the country into a new phase of political uncertainty and economic turmoil.
Speaking at a press conference after the ‘No’ campaign victory, Matteo said he took ‘full responsibility’ for the result.
He said, “My government experience ends here.”
He described the victory of the “No” campaign as an “extraordinarily clear” victory.
Shortly after acknowledging defeat, Renzi tweeted, “Thank you all anyway.”
He confirmed that he would officially resign today.
Although exit polls in Italy have been unreliable in the past, Sunday’s polls showed a huge margin of defeat for Renzi’s ‘Yes’ side, which was behind reforms to rationalize the country’s political system.
Polls by national broadcaster Rai and TV channel La7 both called the “no” side by a margin of at least 54% against 46% for the “yes” side, and by an average of 56, 7 to 43.3%. .
The predicted results were in line with what opinion polls were indicating until November 18, after which the media were banned from publishing the poll results.
Speaking outside his official residence, Palazzo Chigi, at midnight local time, Renzi announced his resignation.
Now that the Prime Minister has resigned, President Sergio Mattarella will be in charge of negotiating the appointment of a new government to lead Italy until the next general elections, due to be held in spring 2018.
WHAT WAS THE SURVEY USED FOR?
Matteo’s proposals were the most extensive constitutional reform in Italy since the end of the monarchy.
The objective was not only to change the organization of the parliament but also to improve the weak governmental stability of the country.
The Italian Prime Minister wanted to strengthen the power of the central government and weaken the Senate, the upper house of parliament.
However, many say the proposed reforms would have given too much power to the prime minister – some within his own party.
But the ‘no’ vote can also be seen as a rejection of the political status quo – much like Brexit and the election of Donald Trump.
The main opposition parties had all taken part in the referendum insisting on calling a snap election if proposals to streamline Italy’s parliament were rejected.
Matteo Renzi, 41, took office in February 2014, with the aim of reforming the Italian parliament.
He had also undertaken to transfer powers from the regions to the national government.
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