On Sunday, Italian citizens voted on Italy’s referendum to remove power from the senate. If it passes, the reform would require proposed laws receive approval from only the lower house of parliament. If it fails, Prime Minister Matteo Renzi has promised to resign his post. But what else happens as a consequence of a no result?
Italy’s Referendum A Nightmare Waiting To Happen In EU
Italy’s vote Sunday has the potential for a bigger impact on the European Union than even Brexit did. The country is voting on whether to streamline the government voting process or leave the Italian senate with its powers. Italy is the fourth largest economy in Europe, and a big part of the EU. Now, after Brexit, and following Donald Trump’s victory in the U.S. presidential race, the Italian referendum could be a pivotal domino in what happens next for the EU. What happens if voters say no?
Matteo Renzi, Italy’s Prime Minister, took power three years ago on a promise of reform and renewal. A no vote would bring about Renzi’s resignation. That would bring the Five Star Movement to power. The Five Star Movement (M5S) is a coalition which wants to leave the European Union. Basically, a no vote means uncertainty for not only Italy, but the European Union as a whole, and global markets as a result of that.
Analysts predict a 60 percent chance of a “NO” result. Such a turnout would mean trouble for Italian banks, many of which are already leaning towards insolvency. One of Italy’s leading banks, Monte dei Paschi di Siena, is planning to sell new shares days after the vote to shore up its balance sheet. But a “no” vote would scare away investors worried that political turmoil could undermine the already shaky balance sheets of Italian banks. While a “NO” vote just leaves the constitution as it currently is, that’s bad news for banks and also the Euro, as Renzi’s replacement would most likely be the M5S’s leader, who would then propose a referendum to leave the EU, throwing the Euro’s survival into doubt and triggering a reaction in global markets.
Here’s a news report from The National regarding Italy’s referendum:
For the sake of Italy, the EU, and markets around the world, people should all be rooting for a “YES” vote.
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