Italian referendum verdict causes upheaval in Europe, PM Matteo Renzi resigns

Rome: The local voters in Italy have given a negative verdict towards the referendum made for a constitutional reform. This is the second major blow to the European Union who has as yet not recovered from the ‘Brexit’ verdict. While Prime Minister, Matteo Renzi has submitted his resignation after the referendum verdict in Italy, the Euro has slid to a 20-month-low. Analysts have expressed concern that this upheaval is making way for troubles for the country’s banking sector and may also invite political and economic instability in Europe.

The Italian Prime Minister, Matteo Renzi had called for a referendum to make constitutional reforms at the start of the year. These reforms were suggested with an aim to reduce the power of the Senate, the Upper House of Italy‘s parliament and to increase the power held by the Prime Minister and the government. This referendum was claimed to be the biggest constitutional reform since the reform that ended monarchy in the country.

Even though Prime Minister Renzi termed the said referendum to be a part of internal reforms in Italy, this referendum that is about to take place on Sunday was being perceived as a verdict towards the EU issue. While Italy is amongst the four leading nations of the EU, it is also known to be a staunch supporter of the EU policies. However, due to migrant crisis and economic problems, the discontent in Italy against the EU is intensifying. Also, the verdict on the referendum is said to be a response to it.

In the referendum that took place on Sunday, Nearly 70% of polling was recorded out of which 59% citizens have rejected the reforms. Prime Minister, Matteo Renzi has accepted the responsibility for the referendum’s failure. The ‘Five Star Movement’ party, which had taken an opposing aggressive stance on the issues of migrants and the EU, has claimed after the new verdict that the ‘Renzi‘ government has lost its credibility and have made demands for a new election.

The Italian referendum has received intense reactions from Europe. The German Foreign Minister, Frank-Walter Steinmeier had delivered a speech in which he stated that Germany viewed the verdict on the Italian referendum with concern. He expressed his concern by saying that the verdict in Italy could not be termed as a positive event considering the issues in Europe. Manfred Weber, a senior member of the European parliament has warned that the verdict in Italy is a big blow to reforms in Europe and this would result in a new period of instability. The industrial group in Germany has also expressed its worry over the verdict in Italy.

It is feared that the verdict in Italy would further increase the severity of the problems being faced by the ‘Banking’ sector in the country. The authorities of the European Union fear that there may arise a need to offer a ‘Bailout’ to Italian banks. The verdict in Italy has had a huge impact on the Euro and caused its value to slide to a 20-month low.