The Italian Prime Minister has announced he will resign after he was defeated in a referendum over constitutional reform. Matteo Renzi’s defeat has now left Italy in something of a political limbo.
Italy, which is the euro zone’s third largest economy, has undergone instability before and the markets have not reacted as negatively as feared.
The President of Italy, Sergio Mattarella, who has a largely ceremonial role, has asked the Prime Minister to remain in post until the budget for 2017 is approved. That could happen as early as within a few days and Mr Renzi is then expected to officially submit his resignation.
Mr Renzi has only been in post for three years and is yet another political shock for the world, which is still reeling from Britain’s decision to leave Europe and then Republican Donald Trump’s victory against Democrat Hillary Clinton.
The referendum was held in Italy to determine whether new rules should be brought in to make the country more governable. However, the regulations were opposed by right wing and populist parties, including campaigners who would like Italy to leave the euro.
Campaigners say that like the Brexit and Trump vote, voters have taken a stand against the traditional elite. Even members of Mr Renzi’s own party, the Democratic Party, which stands to the centre left, were pushing for a ‘no’ vote.
Mr Renzi was Italy’s youngest ever Prime Minister at the age of 41, and had been launded by and compared to the outgoing American president Barack Obama. Mr Obama called him bold and progressive.
However, just as former British prime minister David Cameron left after the Brexit vote, Mr Renzi said he would stand down after voters said no to his proposls to reduce the amount of influence the upper house had. That meant voters knew a ‘no’ vote was a vote to oust Mr Renzi.