Referendum Costituzionale

Unexpected decisions are becoming the norm in modern politics, to the extent perhaps that the lens through which we look at them needs to be changed. The referendum this week in Italy was intended to give more power to Italy’s lower house at the expense of its Senate. Despite early polling in favour, the clear decision (59%) against it, means subdued growth, a weakened Euro (fell 5% against USD), heightened risks to the Italian banking sectors, and a likely Italian exit from the currency (>70% according to CEBR). The vote was ostensibly a stand against Renzi’s leadership and reforms. However, there is a clear undercurrent of anti-establishment exasperation among austerity-hit Italians, where the unemployment rate is high (12%) and growth is some of the slowest in the Euro area (0.3%). Had the Austrians voted-in the far-right Freedom Party, then this would have signalled a significant anti-EU shift this week. It is still, however, in the words of the German foreign minister, ‘not a positive development’ for the future of the EU.