Italy has a habit of leaving powerful marks on Western Society. The country is again about to influence the fundamentals of European life. In a post Trump-electorate and ‘’Brexit’’ world, Europe holds its breath as Italy becomes the latest nation in line to make history. The premise is all too familiar as voters face into a life altering referendum.
As populism grows throughout the western world, investors are gearing up for another surprise on the 4th of December. Italians will vote on constitutional reform. Reform that would change a third of Italy’s 1948 constitution. A no vote would result in Prime Minister Matteo Renzi’s resignation and would change the face of Italian politics.
If Italians vote yes to the referendum’s proposed reforms it would render the Senate almost powerless, reducing the members from 315 to 100. A yes vote would bring tax and labour reforms. Most importantly for Europe, if Renzi’s campaign prevails, recapitalisation of Italy’s troubled banks will be unperturbed. A no vote would cause political uncertainty and tamper the critical industry restructuring of Italy’s debt-ridden banks.
Italy has endured a long recessionary period lasting almost a decade. With unemployment at 11.6%, and a stifled economy, Italian’s patience has been rattled. One million jobs dissolved over the five years following the 2009 financial crisis and Italy have not yet recovered. There has also been rising concerns in the Mediterranean country surrounding the migration crisis.
The wounded economy has been the catapult of the anti-establishment 5 Star Movement (2009), a ‘’cyber utopia’’ which stood for direct democracy. A no vote would increase the likelihood of the populist movement to come into power. The movement’s rhetoric caught the attention of the Italian people. Advocating ‘’amateurs’’ over the ‘’professional politicians’’ whom they believe are responsible for the world’s disarray. Although the party is predominantly Eurosceptic, leaving the Euro would require another referendum and further constitutional reform.
There is much uncertainty surrounding the complicated referendum. With Italy’s future as the prize, December 4th will be a restless night for Europe.