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| Italian Premier Matteo Renzi, left, speaks during a press conference at the premier's office Chigi Palace in Rome, Dec 5, 2016. Renzi acknowledged defeat in a constitutional referendum and announced he will resign on Monday. At right Renzi's wife Agnese Landini listens. (AP / Gregorio Borgia) |
In voting No, Italians also delivered a rebuke to Italy's industrialists, banks and other establishment institutions, which had staunchly backed the referendum. The anti-reform victory, which could spook investors, comes just as the government had made some inroads in cutting the staggering rate of youth employment and while Italy's banks have urgent need for recapitalization.
During the campaign, the risk of political instability in Italy, Europe's fourth-largest economy, triggered market reaction , with bank stocks sinking and borrowing costs on sovereign debt rising.
Renzi had been hoping to beat off the rising populist forces that have gained traction across Europe, as well as with the US presidential victory by Donald Trump
But some analysts predicted the political crisis sparked by Renzi's exit would be short-lived, as politicians focus on lining up support for a new electoral law they view as boosting their parties' chances for whenever elections are called.
Wolfango Piccoli, a London-based analyst and co-president at Teneo Intelligence, said the main risk of Renzi's "devastating defeat" will lie in the medium term.
That could see "a prolonged muddle-through period, the emergence of an ineffective patched-up coalition government in the post-election phase and continuously poor economic performance," Piccoli said in an emailed comment.
The 5-Star Movement, led by anti-euro comic Beppe Grillo, spearheaded the No camp on the constitutional reforms, a package aimed at updating Italy's post-war Constitution that Renzi had depicted as vital to modernizing Italy and reviving its economy.
Characteristically confident -- detractors say arrogant -- Renzi, 41, and Italy's youngest premier, had bet his political future -- or at least his current premiership -- on a Yes vote win, and campaigned hard for a victory in recent weeks to confound opinion polls indicating that it would likely go down to defeat.
With votes counted from nearly all the polling stations in Sunday's referendum, the No's were leading Yes votes by a 6-to-4 margin, Interior Ministry data indicated. The turnout of 67 percent was especially high for a referendum, and more in line for a vote for Parliament.
Renzi had been hoping to beat off the rising populist forces that have gained traction across Europe, as well as with the US presidential victory last month by billionaire political outsider Donald Trump.
Earlier on Sunday, in Austria's presidential runoff, left-leaning candidate Alexander Van der Bellen prevailed over a right-wing populist.
Leaders of the populist 5-Star Movement, which is led by Grillo, joined the chorus among opposition forces for early elections. The 5-Stars are the chief rivals of Renzi's Democrats and are anxious to achieve national power for the first time.
"Today the caste in power lost," said a 5-Star leader, Luigi Di Maio. It was a sharp retort to Renzi's characterizing the reforms as an opportunity to shrink the "caste" of elite, perk-enjoying politicians by reducing the numbers and powers of Senators.
"Arrogance lost, from which we'll learn many things in forming our team for government and our platform," Di Maio said. "Starting tomorrow we'll be working on a government of the 5-Stars, we'll involve the energies and the free persons who want to participate."
