ROME, Nov. 25 (UPI) — A referendum on changes in Italy’s constitution could be the next evidence of populism after Brexit and the U.S. presidential election, and could affect the eurozone, analysts said.
Italian citizens will vote Dec. 4 on whether to allow adjustments drastically weakening the power of the senate, required if Prime Minister Matteo Renzi will be able to push his package of economic reforms through Italy’s complex lawmaking process. 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.
In polls released prior to a pre-vote blackout, the campaign to reject the reforms had a five percentage point lead.
Renzi’s potential departure would require a new parliamentary election and could open the door to gains by the Five Star Movement, a political party that advocates Italy’s parting of ways with the eurozone, the group of countries using the euro as its currency. An election victory by the Five Star Movement is seen as a long shot, but in a year in which Britain voted to leave the European Union and Donald Trump won the U.S. presidency as an outsider, Europe is bracing for another potential shock.
The referendum “could precipitate a wider eurozone crisis. People may not have been looking seriously at this, pre-Brexit [and] Trump … but in the year of the outsiders, they sure are now,” Jamie Reuben, of the investment fund Reuben Brothers and one of the founders of Metro Bank UK, told CNBC.
HSBC Bank warned after the U.S. election that a global surge in anti-establishment feeling, demonstrated by British referendum on EU membership and the U.S. presidential election, could encourage populist views already evident in Italy. The risk has already been figured into the prices of Italian stocks, which have declined as the country deals with slowing economic growth and high unemployment. The benchmark FTSE MIB index of Italian companies has declined 23 percent in 2016 and is currently at an eight-week low; the STOXX Europe 600 index, of European companies, has fallen only 7 percent this year by comparison.