Italy’s Renzi told to delay quitting as PM

Pollsters say lower participation could favor Renzi, as hostility to his reform is strongest among young voters and those in the poor south, segments of the population that often don’t bother to vote.

Italian Prime Minister Matteo Renzi, right, arrives at the Quirinale presidential palace to meet President Sergio Mattarella and tender his resignation in Rome. Meanwhile, European stocks more broadly showed no ill effects after the Italian vote, and United States markets are also trading higher at the time of writing.

Demonstrators gather in downtown Rome after Italian PM Matteo Renzi conceded defeat.

(Angelo Carconi/ANSA via AP).

The electorate agreed. But the referendum was more than a vote on constitutional reform, it was widely regarded as a chance to reject establishment politics.

However, President Mattarella has asked Mr Renzi to stay on until the 2017 budget has been approved by parliament, which will potentially happen later this week.

The current election law, which Renzi wanted to reform, would hand a huge bonus of seats to the lower house while maintaining a proportional system for the upper house, raising the potential for parliamentary gridlock.

European politicians reacted calmly to the result, saying there was no crisis. The party’s leader, Giorgia Meloni, has called for a speedy vote. He can either opt for a so-called “technical” government, which would lead the executive through to the end of the legislature in early 2018, or he could nominate a senior figure in the Renzi administration to lead a caretaker government through to the general election in 2018.

Silvio Berlusconi’s movement has been severely weakened since the three-time former premier’s tax fraud conviction barred him from office.

According to projections, 59.6% of the people who cast their ballots on Sunday said “no” to a plan backed by Renzi that would have overhauled Italy’s legislature to make it easier to pass laws, including measures meant to make the country more competitive.

Mr Berlusconi himself was forced to resign in 2011 amid growing worldwide concern over Italy’s sovereign debt crisis and was replaced by economist Mario Monti, without elections. After Monti’s government unraveled, a Democrat, Enrico Letta, was appointed.

Markets seemed to have taken Mr Renzi’s departure in their stride in the short-term.

Mr Renzi’s resignation could open the door to early elections next year and to the possibility of an anti-euro party, the opposition 5-Star Movement, gaining power in the heart of the single currency.

Mr Grillo himself can not hold office because of a manslaughter conviction arising from a vehicle accident.

Currency strategists at Société Générale expect the euro to fall to parity with the dollar by spring next year, around the time when the French could elect Marine Le Pen of the far-right, anti-EU National Front to the presidency.

“It doesn’t really change the situation economically in Italy or in the Italian banks”, said Jeroen Dijsselbloem, the Dutch finance minister who chairs meetings of his euro-area counterparts.

Economy Minister Pier Carlo Padoan, who has pulled out of meetings with European finance ministers in Brussels this week, is viewed as a possible candidate for prime minister.

Mr Van der Bellen said his win sent a “message to the capitals of the European Union that one can win elections with high European positions”.

However German Foreign Minister Frank-Walter Steinmeier said that Germany was watching the developments in Italy “with concern”. Holger Schmieding, at the Berenberg private bank, said the risk that Italy could choose to leave the euro, while still remote, had increased.