Renzi should stay in power even in defeat: Italian minister

Italians will vote on December 4 to either accept or deny Prime Minister Matteo Renzi’s proposed reform to Italy’s government. In particular, the new rules on co-operation between the chamber of deputies and a reformed senate in the passing of legislation is likely to make the whole legislative process more cumbersome and unpredictable, not less. Proponents claim the reform is necessary to get rid of the byzantine bureaucratic system and encourage major investments, both locally and from foreign investors.

Further, consider the fact that incompetence and corruption have for many years now been problems primarily at the regional and local level.

Traders are bracing for the Italian index potentially losing more ground on referendum-related worries. He strongly personalized it when he said at the start that he would resign if the amendments don’t pass.

If he does stand down, a caretaker government will be appointed until the general election in 2017 or 2018.

Ostensibly the referendum on December 4 is asking Italians to approve plans to reduce the power of the upper house. Moreover, Renzi also enjoys a strenuous backing by the Italian media at large, especially, his critics argue, by RAI, the government-controlled public broadcast. The referendum is widely regarded as a show of support, or lack of it, for Renzi, and he may resign if the proposal to change the constitution fails, CNBC reported. A flood of cheap money has prompted investors to scour the globe for yield, forcing companies to issue higher dividends or initiate share buybacks with spare cash, rather than invest. Francois Fillon heads into a five-day runoff campaign as the favourite to become the conservative candidate in France’s presidential election over opponent Alain Juppe, after a first-round vote on Sunday that ousted ex-president Nicolas Sarkozy from the race. And if that happens, the anti-establishment Five Star Movement – which was founded just seven years ago by comedian Beppe Grillo – has a good shot at getting in to power. Since its inception, the Five Star Movement has defined itself as “post-ideological”, trying to lure voters from the disenfranchised radical left and the liberal right. That has made the referendum a confidence vote on the government as the economy struggles to revive and Renzi’s popularity falls.

The reform is also opposed by a rebel faction within the premier’s own party.

In case of a YES vote: Matteo Renzi will remain as Prime Minister of Italy and will have all the means that he requires to revive the Italian economy, fight the banking crisis and keep Italy in EU.

“Whilst it may garner less attention than Italian events, the prospect of right-wing president may provide a reminder of the mood music of European citizens ahead of the more important elections”, said Investec economist Ryan Djajasaputra. In Germany, Angela Merkel announced on Sunday she would seek a fourth term as chancellor in next year’s election, a sign of stability after Britain’s vote for Brexit and Trump’s victory in the USA election. In the worst-case scenario, where a new candidate was unable to form an agreement on a new coalition, snap elections could be called. Italy also introduced an electoral law in July called the Italicum, which gives bonus seats to the biggest victor in elections.