Italy Referendum 2016: PM Matteo Renzi to Hand in His Resignation

Italy’s PM Matteo Renzi will meet President Sergio Mattarella to hand in his resignation after suffering a defeat in a constitutional referendum.

President Sergio Mattarella must either appoint a new prime minister or call early elections, as demanded by Italy’s opposition anti-establishment parties.

The president might also try to persuade Matteo Renzi to stay in charge until the 2017 budget is passed later this week, reports say.

European leaders have been playing down the risks of fallout from the crisis.

Matteo Renzi’s resignation comes amid fears of long-term instability for Italy’s troubled banking sector in the long-term. Shares in Italian banks lost ground following news of Matteo Renzi’s defeat.

The No vote in December 4 constitutional referendum was widely seen as a rejection of establishment politics in Italy.

Matteo Renzi held a final cabinet meeting on December 5, before traveling to the presidential palace to submit his formal resignation.

In spite of the pressure from the opposition, early elections are thought to be unlikely.

Instead, the president may appoint a caretaker administration led by Matteo Renzi’s Democratic Party, which would carry on until an election due in the spring of 2018.

Finance Minister Pier Carlo Padoan is the favorite to succeed Matteo Renzi as prime minister.

With most ballots counted, the No vote leads with 60% against 40% for Yes, with a 70% turnout, a heavier than expected defeat for the government.

Matteo Renzi staked his political future on his attempt to change Italy’s cumbersome political system. He wanted to strengthen central government and weaken the Senate, the upper house of parliament.

His opponents – including some within his own party – had argued that the reforms would give the prime minister too much power. The electorate agreed.

However, more than a resounding victory for the No camp, it was a chance for a medley of populist parties to reject establishment politics.

The opposition, headed by the Five Star Movement, capitalized on Matteo Renzi’s declining popularity, years of economic stagnation, and the problems caused by tens of thousands of migrants arriving in Italy from Africa.

After the vote, Matteo Renzi defended his record, saying exports and job numbers were up and unemployment was down to 11.7%.

Five Star’s leader, Beppe Grillo, has called for an election “within a week”.

President Sergio Mattarella, who praised the high voter turnout, called for a political climate with “serenity and mutual respect”.

There are obligations and deadlines which Italy’s institutions will have to honor “guaranteeing a response that meets the problems of the moment,” he said.