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Italy referendum: 'Period of uncertainty' predicted after Matteo Renzi's defeat – live Italy referendum: 'Period of uncertainty' predicted after Matteo Renzi's defeat – live
(35 minutes later)
11.22am GMT
11:22
Luigi Scazzieri an analyst at the Centre for European Reform argues that the vote is unlikely to lead of more instability in Europe. Writing for the Guardian’s Opinion section he says:
A new government would likely be made up of the same political majority currently supporting Renzi, with the possible addition of Berlusconi’s Forza Italia party. It would face the same challenges and would continue to act in much the same way, steering the country towards new elections in late 2017 or 2018 and pursuing the stony path of incremental economic reform. Indeed, while Renzi sought to portray the reforms as a make or break moment for Italy, the economic reforms of the past five years are not about to be undone.
A takeover by the populist Five Star Movement is unlikely either now or in the next election. The movement may run out of steam, as it increasingly becomes embroiled in political mishaps arising from its administration of Rome and Turin. Crucially, planned electoral reforms are likely to lead a form of proportional representation that will make it difficult for any single party to form a government. The continuation of coalition governments will exclude the Five Star Movement, which refuses to take part in them.
And any new Italian government is likely to behave in the same way as Renzi’s government did towards its European allies, seeking to bend fiscal rules in its favour and to press for a more expansive fiscal policy. It will also continue to demand solidarity from the EU with its efforts to deal with migrants and to rebuild the areas affected by recent earthquakes. Italy is unlikely to be the domino that leads to more instability in Europe.
11.13am GMT
11:13
Paul Mason, Guardian columnist and author of Postcapitalism, is buoyed by the referendum result in Italy and the presidential election in Austria.
Italian No to parliamentary autocracy is logical and rational; so is the Austrian no to the far right. Good day for Europe, bad for Schauble
Lesson of Renzi - Germany: take your heel off neck of Greece tonight & grant debt relief now. But no, it will be neoliberal biz as usual...
Renzi defeat = victory for Italian democracy. Hofer defeat = victory for Austrian democracy. How hard is it to support democracy peeps?
10.59am GMT
10:59
Matteo Salvini, leader of Italy’s far-right Northern League, says the result – alongside the “hair’s breadth” defeat of far-right Freedom party candidate Norbert Hofer in Austria – sends a message to the EU.
10.54am GMT10.54am GMT
10:5410:54
Italy might have to spend public money to rescue some of its banks, including by taking stakes in them, according to European Central Bank Governing Council member Ewald Nowotny.Italy might have to spend public money to rescue some of its banks, including by taking stakes in them, according to European Central Bank Governing Council member Ewald Nowotny.
“The difference between Italy and other states such as Germany and Austria is that, until now, in Italy there has not been any significant state aid or state takeovers (of banks),” Reuters quoted him saying.“The difference between Italy and other states such as Germany and Austria is that, until now, in Italy there has not been any significant state aid or state takeovers (of banks),” Reuters quoted him saying.
Nowotny, who heads Austria’s central bank, added: “It therefore cannot be ruled out that it will be necessary for the state to take stakes (in banks) in some way.”Nowotny, who heads Austria’s central bank, added: “It therefore cannot be ruled out that it will be necessary for the state to take stakes (in banks) in some way.”
Follow the latest market reaction here:Follow the latest market reaction here:
10.46am GMT10.46am GMT
10:4610:46
BuzzFeed’s Italian Europe editor Alberto Nardelli cautions against playing down the referendum result:BuzzFeed’s Italian Europe editor Alberto Nardelli cautions against playing down the referendum result:
The next time Italy goes to the polls you have a 3 horse race: 1) M5S 2) PD (in disarray) and 3) centre-right/Lega - they all could winThe next time Italy goes to the polls you have a 3 horse race: 1) M5S 2) PD (in disarray) and 3) centre-right/Lega - they all could win
10.41am GMT10.41am GMT
10:4110:41
Germany’s foreign minister Frank-Walter Steinmeier has admitted that the result of the Italian referendum is a “concern’.Germany’s foreign minister Frank-Walter Steinmeier has admitted that the result of the Italian referendum is a “concern’.
He said that while the result of the Italian referendum on constitutional reform,was “not the end of the world,” it was also “not a positive development in the case of the general crisis in Europe.”He said that while the result of the Italian referendum on constitutional reform,was “not the end of the world,” it was also “not a positive development in the case of the general crisis in Europe.”
Steinmeier said that Germany was watching the developments “with concern.”Steinmeier said that Germany was watching the developments “with concern.”
He added that Renzi’s government had been moving in the right direction, and he said Germany hoped the new Italian government would continue along the same path.He added that Renzi’s government had been moving in the right direction, and he said Germany hoped the new Italian government would continue along the same path.
10.35am GMT10.35am GMT
10:3510:35
Stephanie KirchgaessnerStephanie Kirchgaessner
What happens now in Italy?What happens now in Italy?
Our Rome correspondent Stephanie Kirchgaessner has the answers:Our Rome correspondent Stephanie Kirchgaessner has the answers:
Prime Minister Matto Renzi said at an emotional press conference after the vote that he would submit his resignation to Italy’s president, Sergio Mattarella, on Monday afternoon.Prime Minister Matto Renzi said at an emotional press conference after the vote that he would submit his resignation to Italy’s president, Sergio Mattarella, on Monday afternoon.
We can expect that the president will either accept his resignation or ask Renzi to stay, but the prime minister’s overwhelming loss, with about 60% of Italians rejecting the proposed changes, mean he is most likely leaving Palazzo Chigi. For now.We can expect that the president will either accept his resignation or ask Renzi to stay, but the prime minister’s overwhelming loss, with about 60% of Italians rejecting the proposed changes, mean he is most likely leaving Palazzo Chigi. For now.
Then what?Then what?
With Renzi gone it will fall to Mattarella to cobble together a new government. He will call in all the leading parties to see if they can reach an agreement on a new government. The major players will be Renzi, who is still the leader, for now, of the ruling Democratic party; Silvio Berlusconi, representing Forza Italia; Beppe Grillo or one of his emissaries – young guns Luigi Di Maio or Alessandro Di Battista; and Matteo Salvini of the Northern League.With Renzi gone it will fall to Mattarella to cobble together a new government. He will call in all the leading parties to see if they can reach an agreement on a new government. The major players will be Renzi, who is still the leader, for now, of the ruling Democratic party; Silvio Berlusconi, representing Forza Italia; Beppe Grillo or one of his emissaries – young guns Luigi Di Maio or Alessandro Di Battista; and Matteo Salvini of the Northern League.
Hang on, won’t there be an election?Hang on, won’t there be an election?
That’s what the Five Star Movement and the Northern League want. They will put considerable pressure on Mattarella to dissolve the current parliament and set a date for a snap vote.That’s what the Five Star Movement and the Northern League want. They will put considerable pressure on Mattarella to dissolve the current parliament and set a date for a snap vote.
If they appear to be in a hurry on this front, that’s because they are, and for good reason. One of the major reforms that the Renzi government passed before Sunday’s rout was an elaborate change to the country’s electoral laws. The change was designed for the winner of the next election, which everyone thought would take place in 2018, to automatically take a majority of seats in parliament. At the time the so-called Italicum law passed, it was fiercely opposed by the Five Star Movement, which compared it to a fascist power grab.If they appear to be in a hurry on this front, that’s because they are, and for good reason. One of the major reforms that the Renzi government passed before Sunday’s rout was an elaborate change to the country’s electoral laws. The change was designed for the winner of the next election, which everyone thought would take place in 2018, to automatically take a majority of seats in parliament. At the time the so-called Italicum law passed, it was fiercely opposed by the Five Star Movement, which compared it to a fascist power grab.
The changes in election rules were meant to work alongside the changes to the constitution that have now been rejected by Italian voters. The Democratic party has made it clear that it now wants to, and must, change the electoral law back to a proportional system.The changes in election rules were meant to work alongside the changes to the constitution that have now been rejected by Italian voters. The Democratic party has made it clear that it now wants to, and must, change the electoral law back to a proportional system.
Not surprisingly, the Five Star Movement sees a big opportunity for the party to win if elections are held right now, under the new electoral laws, and before they are changed back to a proportionate system. This is the brutal fight we are heading into. Mattarella will have the final say.Not surprisingly, the Five Star Movement sees a big opportunity for the party to win if elections are held right now, under the new electoral laws, and before they are changed back to a proportionate system. This is the brutal fight we are heading into. Mattarella will have the final say.
So will there be a snap election or not?So will there be a snap election or not?
Stay tuned. Most analysts do not think it is a real possibility, but there are a lot of moving parts at the moment. If the main centrist and traditional political parties – the Democratic party and Forza Italia – can stay aligned, because both have an interest in changing the electoral law back to the way it was, they can likely stave off calls for a snap election.Stay tuned. Most analysts do not think it is a real possibility, but there are a lot of moving parts at the moment. If the main centrist and traditional political parties – the Democratic party and Forza Italia – can stay aligned, because both have an interest in changing the electoral law back to the way it was, they can likely stave off calls for a snap election.
In which case, who might be the next prime minister?In which case, who might be the next prime minister?
Some names have been floating around for weeks, given that Renzi was behind in the polls for a while and Sunday’s defeat was not really unexpected. The leading contender at the moment seems to be Pier Carlo Padoan, who currently serves as finance minister.Some names have been floating around for weeks, given that Renzi was behind in the polls for a while and Sunday’s defeat was not really unexpected. The leading contender at the moment seems to be Pier Carlo Padoan, who currently serves as finance minister.
It’s a choice that might calm investor concerns, given that Padoan has long been seen as the lead figure in dealing with the aftermath of the economic crisis and continuing problems with Italy’s banking system. Dario Franceschini, the culture minister, is another name that has been in the mix, as well as economic development minister Carlo Calenda, also famous for being at the centre of an unlikely row over prosecco with Boris Johnson.It’s a choice that might calm investor concerns, given that Padoan has long been seen as the lead figure in dealing with the aftermath of the economic crisis and continuing problems with Italy’s banking system. Dario Franceschini, the culture minister, is another name that has been in the mix, as well as economic development minister Carlo Calenda, also famous for being at the centre of an unlikely row over prosecco with Boris Johnson.
Federico Santi, an Italy analyst at Eurasia Group in London, said it was most likely that Renzi’s replacement would be a member of the PD, and one who would be deemed acceptable to critical factions within the party as well as centrist coalition partners such as Angelo Alfano, the centre-right interior minister.Federico Santi, an Italy analyst at Eurasia Group in London, said it was most likely that Renzi’s replacement would be a member of the PD, and one who would be deemed acceptable to critical factions within the party as well as centrist coalition partners such as Angelo Alfano, the centre-right interior minister.
But Renzi will also want to pick someone who does not necessarily harbour grand political ambitions themselves who might ultimately challenge him in the likely case that he wants to return to Palazzo Chigi in the future.But Renzi will also want to pick someone who does not necessarily harbour grand political ambitions themselves who might ultimately challenge him in the likely case that he wants to return to Palazzo Chigi in the future.
What will the caretaker government do and how long will it take to get off the ground?What will the caretaker government do and how long will it take to get off the ground?
Analysts predict that a caretaker government could be in place within a few weeks and that Renzi could remain at the helm of the government until a new government is secured with the backing of parliament and one other piece of impending business – passage of the 2017 budget – is completed.Analysts predict that a caretaker government could be in place within a few weeks and that Renzi could remain at the helm of the government until a new government is secured with the backing of parliament and one other piece of impending business – passage of the 2017 budget – is completed.
How has Mattarella handled crises like this in the past?How has Mattarella handled crises like this in the past?
We really don’t know. This will be the first time the president, who was elected in 2015, has been at the centre of such a big moment for the country. He has been tight-lipped so far and is supposed to be an independent actor, making decisions in the best interests of Italy.We really don’t know. This will be the first time the president, who was elected in 2015, has been at the centre of such a big moment for the country. He has been tight-lipped so far and is supposed to be an independent actor, making decisions in the best interests of Italy.
10.25am GMT10.25am GMT
10:2510:25
Alessandra Mussolini, Italian Senator, Forza Italia MEP and the granddaughter of the dictator Benito Mussolini, says the Italian referendum result is ominous for German Chancellor Angela Merkel.Alessandra Mussolini, Italian Senator, Forza Italia MEP and the granddaughter of the dictator Benito Mussolini, says the Italian referendum result is ominous for German Chancellor Angela Merkel.
@forza_italia Vittoria del NO segnale anche a #Europa a trazione tedesca. Endorsement #Merkel e #Schauble tomba per il SI @ForzaItaliaEU@forza_italia Vittoria del NO segnale anche a #Europa a trazione tedesca. Endorsement #Merkel e #Schauble tomba per il SI @ForzaItaliaEU
She spells out the messages by retweeting a provocative image of Europe’s fallen leaders posted by a right wing blogger.She spells out the messages by retweeting a provocative image of Europe’s fallen leaders posted by a right wing blogger.
Retweeted Paul Joseph Watson (@PrisonPlanet):pic.twitter.com/tTWv9lAa0E https://t.co/EizZmdHjPERetweeted Paul Joseph Watson (@PrisonPlanet):pic.twitter.com/tTWv9lAa0E https://t.co/EizZmdHjPE
10.16am GMT10.16am GMT
10:1610:16
Matteo Salvini, head of Italy’s far right Northern League party, has hailed the referendum result as Italy’s Liberation Day from the government of Matteo Renzi. He is giving a press conference that is being streamed on Facebook.Matteo Salvini, head of Italy’s far right Northern League party, has hailed the referendum result as Italy’s Liberation Day from the government of Matteo Renzi. He is giving a press conference that is being streamed on Facebook.
10.11am GMT10.11am GMT
10:1110:11
Pierre Moscovici, the European Commissioner for Economic and Financial Affairs, is putting a brave face on the Italian referendum.Pierre Moscovici, the European Commissioner for Economic and Financial Affairs, is putting a brave face on the Italian referendum.
Speaking to reporters in Brussels he said he has “full confidence in Italian authorities to manage this situation”.Speaking to reporters in Brussels he said he has “full confidence in Italian authorities to manage this situation”.
He added: “I’m very confident in the capacity of the eurozone to resist all kind of shocks.”He added: “I’m very confident in the capacity of the eurozone to resist all kind of shocks.”
'Italian authorities well-equipped to deal with the situation, says @pierremoscovici 'Italy is a solid country on which we rely.''Italian authorities well-equipped to deal with the situation, says @pierremoscovici 'Italy is a solid country on which we rely.'
French Finance Minister Michel Sapin, took a similar move-along-nothing-to-see-here line. He insisted that the Italian referendum “is a question of internal politics. The referendum wasn’t about Europe.”French Finance Minister Michel Sapin, took a similar move-along-nothing-to-see-here line. He insisted that the Italian referendum “is a question of internal politics. The referendum wasn’t about Europe.”
9.50am GMT9.50am GMT
09:5009:50
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9.47am GMT9.47am GMT
09:4709:47
Germany’s hardline finance minister, Wolfgang Schäuble, says Italy should continue with Renzi’s economic policies.Germany’s hardline finance minister, Wolfgang Schäuble, says Italy should continue with Renzi’s economic policies.
“Italy has to continue the path that Prime Minister Renzi has taken economically and politically”, Reuters quoted Schäuble as saying.“Italy has to continue the path that Prime Minister Renzi has taken economically and politically”, Reuters quoted Schäuble as saying.
The response prompted a Gif of a headshaking Schäuble:The response prompted a Gif of a headshaking Schäuble:
#Schäuble: "Continuare con politiche economiche Renzi. Non c'è motivo per crisi dell'Euro" Arrivano le prime direttive. #5dicembre pic.twitter.com/rdwRFBXGJS#Schäuble: "Continuare con politiche economiche Renzi. Non c'è motivo per crisi dell'Euro" Arrivano le prime direttive. #5dicembre pic.twitter.com/rdwRFBXGJS
9.39am GMT9.39am GMT
09:3909:39
The euro has rebounded from a 21-month low, clawing back almost all the ground it had lost overnight. Reuters has more:The euro has rebounded from a 21-month low, clawing back almost all the ground it had lost overnight. Reuters has more:
The single currency tumbled as much as 1.4% in Asian trade to hit $1.0505, its weakest since March 2015, as investors worried about increased political uncertainty in the euro zone. But by 0855 GMT it had recovered almost all of those losses, trading down 0.1% on the day at $1.0650.The single currency tumbled as much as 1.4% in Asian trade to hit $1.0505, its weakest since March 2015, as investors worried about increased political uncertainty in the euro zone. But by 0855 GMT it had recovered almost all of those losses, trading down 0.1% on the day at $1.0650.
The result had been widely expected, though the size of the “No” vote, at with 59.1%, was more emphatic than had been forecast.The result had been widely expected, though the size of the “No” vote, at with 59.1%, was more emphatic than had been forecast.
“Because the vote was largely expected, there really isn’t enthusiasm to push the move too far,” said Societe Generale macro strategist Kit Juckes. “From here, FX will take its cue from (bond) spreads, the equity market reaction, and wait for rating agencies to opine.”“Because the vote was largely expected, there really isn’t enthusiasm to push the move too far,” said Societe Generale macro strategist Kit Juckes. “From here, FX will take its cue from (bond) spreads, the equity market reaction, and wait for rating agencies to opine.”
Italy’s 10-year government bond yield shot up as much 13 basis points to above 2% soon after European bond markets opened, still below a 14-month high around 2.17% touched in late November. By 0855 GMT it was back below 2%, up 6 basis points on the day.Italy’s 10-year government bond yield shot up as much 13 basis points to above 2% soon after European bond markets opened, still below a 14-month high around 2.17% touched in late November. By 0855 GMT it was back below 2%, up 6 basis points on the day.
European Central Bank sources told Reuters last week that the bank was ready to step up purchases of Italian government bonds temporarily if the referendum result were to spur a sell-off, but traders said on Monday that they had seen no evidence of the ECB in the market so far.European Central Bank sources told Reuters last week that the bank was ready to step up purchases of Italian government bonds temporarily if the referendum result were to spur a sell-off, but traders said on Monday that they had seen no evidence of the ECB in the market so far.
The ECB holds its next policy meeting on Thursday. “(The result) has marginally increased the likelihood of a crisis like in 2011 or something, but even a full-blown crisis ... is not in itself something that is a meaningful burden for the euro,” said Commerzbank’s head of currency strategy in Frankfurt, Ulrich Leuchtmann, referring to the spiralling of Italian borrowing costs five years ago.The ECB holds its next policy meeting on Thursday. “(The result) has marginally increased the likelihood of a crisis like in 2011 or something, but even a full-blown crisis ... is not in itself something that is a meaningful burden for the euro,” said Commerzbank’s head of currency strategy in Frankfurt, Ulrich Leuchtmann, referring to the spiralling of Italian borrowing costs five years ago.
“The only thing that would be a big burden (for the euro) is if the ECB reacts to it with more expansionary monetary policy, but ... Italian government bond spreads have reacted relatively benignly at the moment, and therefore it’s relatively unlikely that the ECB will do anything big.”“The only thing that would be a big burden (for the euro) is if the ECB reacts to it with more expansionary monetary policy, but ... Italian government bond spreads have reacted relatively benignly at the moment, and therefore it’s relatively unlikely that the ECB will do anything big.”
Some analysts said the euro was drawing some support from Sunday’s presidential election in Austria, where voters roundly rejected Norbert Hofer, the candidate vying to become the first freely elected far-right head of state in Europe since World War Two.Some analysts said the euro was drawing some support from Sunday’s presidential election in Austria, where voters roundly rejected Norbert Hofer, the candidate vying to become the first freely elected far-right head of state in Europe since World War Two.
Our Business Live blog has the latest:Our Business Live blog has the latest:
9.27am GMT9.27am GMT
09:2709:27
Lee Hardman, currency analyst as the Japanese finacial service company MUFG, says the relatively mild reaction on the markets reflects the irony that a no vote actually limits the risk of anti establishment parties gaining power in Italy.Lee Hardman, currency analyst as the Japanese finacial service company MUFG, says the relatively mild reaction on the markets reflects the irony that a no vote actually limits the risk of anti establishment parties gaining power in Italy.
He said:He said:
“By rejecting the constitutional reforms, the Senate will retain it powers acting as a counter balance to the Chamber of Deputies.“By rejecting the constitutional reforms, the Senate will retain it powers acting as a counter balance to the Chamber of Deputies.
“The system of checks and balances reduces the risk of an anti-establishment party like the Five Star Movement gaining power and being able to call a referendum on the euro.“The system of checks and balances reduces the risk of an anti-establishment party like the Five Star Movement gaining power and being able to call a referendum on the euro.
“The current updated electoral law, which favours majorities in the Chamber of Deputies but is based on more proportional rules in the Senate, also makes it difficult for the Five Star Movement to govern by favouring political fragmentation.“The current updated electoral law, which favours majorities in the Chamber of Deputies but is based on more proportional rules in the Senate, also makes it difficult for the Five Star Movement to govern by favouring political fragmentation.
“The award of a majority premium of seats to the most popular party in the Chamber of Deputies will be challenged in court, and the law is likely to be changed under a potential caretaker government to make it favour more the formation of coalitions rather than one party rule which would make it even more difficult for the Five Star Movement to govern.“The award of a majority premium of seats to the most popular party in the Chamber of Deputies will be challenged in court, and the law is likely to be changed under a potential caretaker government to make it favour more the formation of coalitions rather than one party rule which would make it even more difficult for the Five Star Movement to govern.
“The difficulty the Five Star Movement faces in coming into power is one of the reasons why the negative euro reaction has been more modest than some have feared.”“The difficulty the Five Star Movement faces in coming into power is one of the reasons why the negative euro reaction has been more modest than some have feared.”
9.21am GMT9.21am GMT
09:2109:21
Leading Ukippers are in a jubilant mood.Leading Ukippers are in a jubilant mood.
Let's be clear: Italy has voted against the EU. Soon, there may no longer be an EU from which to Brexit.Let's be clear: Italy has voted against the EU. Soon, there may no longer be an EU from which to Brexit.
Has Nick Clegg called for a second referendum in Italy yet?Has Nick Clegg called for a second referendum in Italy yet?
Hope the exit polls in Italy are right. This vote looks to me to be more about the Euro than constitutional change.Hope the exit polls in Italy are right. This vote looks to me to be more about the Euro than constitutional change.
I really think Italy needs to leave the eurozone to prosper again. Hoping today's referendum will speed that day.I really think Italy needs to leave the eurozone to prosper again. Hoping today's referendum will speed that day.
But Brexit-backing Conservative MEP Daniel Hannan predicts that Italy won’t be leaving the Euro.But Brexit-backing Conservative MEP Daniel Hannan predicts that Italy won’t be leaving the Euro.
Unfortunately, I suspect Italy will keep the euro - despite, to a single approximation, not having grown since it joined in 1999.Unfortunately, I suspect Italy will keep the euro - despite, to a single approximation, not having grown since it joined in 1999.
UpdatedUpdated
at 9.59am GMTat 9.59am GMT