Italian PM to resign after approval of 2017 budget

Investors had been anticipating Renzi’s defeat for several days, and had sold off Italian stocks and bonds. The budget was passed earlier Wednesday.

The 41-year-old Prime Minister Matteo Renzi is slated to hand in his resignation today after only 2 1/2 years in office and after acknowledging his stinging defeat in Sunday’s referendum. He will stay in a caretaker’s role at the request of Italy’s president until a new government can be formed.

The vote ended months of campaigning for a reform that Renzi had said would bring political stability to Italy – but that opponents said jeopardized democratic checks and balances. Renzi, as the Democratic Party leader, used party manoeuvring to push Letta out of office and take the premiership for himself in February 2014. The Euroskeptic Five Star Movement said its a defeat of what it called the arrogance of power and demanded immediate elections.

The result of the referendum could lead to snap elections as early as February and the growing popularity of the Eurosceptic Five Star Movement has many anxious the Italians could vote to leave the political bloc as Britain had done earlier in the year. “It was a unsafe reform for the roots of our democratic system”, Elly Schlein, an Italian member of the European Parliament, said.

Infrastructure Minister Graziano Delrio, a PD member and close ally of Renzi, said on Tuesday the best solution would be for an interim government to be put in place to quickly change the electoral law so an election could be held “in the spring”.

Renzi announced on Sunday he would step down, as soon as it was clear the reform plan would not be approved.

A torn anti-referendum poster shows Premier Matteo Renzi, in Rome, Monday, Dec. 5, 2016.

Once backing Renzi on the need for the reforms, Berlusconi came out against the referendum, even though executives in his media empire backed the reforms as being good for the economy.

– “Too many unknowns” -Italy’s mainstream parties on the left and right share a common interest in keeping the Five Stars out, but disagree on how to do it.

“As we saw after the United States election and the Brexit vote, markets could fully price these developments sooner than expected and reach oversold levels”, he said.

President Mattarella must either appoint a new PM or trigger elections.

The consortium of bankers supporting Monte Paschi’s cash call will meet at 1100 GMT, a source familiar with the situation told Reuters.

It was unclear when Renzi might return to the Quirinal presidential palace to formally resign following the rejection by voters of constitutional reforms he had championed.

Renzi’s squabbling Democrats are the biggest party in the legislature, which could lead the president to tap someone from the Democratic Party fold.

“Our party does not fear democracy, nor vote”.

Meanwhile in Brussels, officials insisted all was still ‘well’.

The talks are aimed at sounding out party leaders to determine the configuration of a new government that would have enough support in Parliament to win both the required confirmation vote and to lead the country until elections are next held.