Rome: Prime Minister Matteo Renzi said he will resign after his government lost a referendum on constitutional reform by a wide margin on Sunday, opening the door to renewed political instability in Italy.
With exit polls showing about 59 per cent of Italians had voted against his plans to rein in the power of the Italian Senate, the prime minister said he would hand his resignation to President Sergio Mattarella on Monday local time.
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Renzi to resign following referendum defeat
Italian Prime Minister Matteo Renzi has said he will resign following a defeat in a referendum on constitutional reform.
"I have lost," Renzi said in a televised statement. "We gave the Italians an opportunity to change, but we didn't succeed."
Renzi, who had promised to resign if his flagship project was defeated, addressed the nation at around midnight Sunday (10am Monday AEST). He said the 'No' camp won "extraordinarily clearly".
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"I take full responsibility for the defeat.
"Tomorrow afternoon there will be a ministerial meeting (...) and I will resign," he said.
The referendum proposed to cut the number of senators from 315 to 100 and remove the Senate's right to hold votes of no confidence in the government. It was projected to save the country €500 million ($709 million) a year and speed up legislative work.
An exit poll by the Piepoli Institute/IPR for state television station RAI, had estimated the 'No' vote at 54-58 per cent against 42-46 per cent for 'Yes'. Two other polls gave 'No' a similar lead of at least 10 points. Voting ended at 11pm.
The result represents a fresh blow to the European Union which is struggling to overcome an array of crises and was eager for Renzi to continue his reform drive in the euro zone's heavily indebted, third-largest economy.
The 41-year-old PM becomes the second European leader this year to lose his job after wrongly betting that he could overcome a populist backlash to reinforce his mandate.
With UK politics still roiled by the fallout from David Cameron's post-Brexit ouster, Mattarella has to decide on who should form the next government and plot a way forward for the country.
Possible successors who might be asked to lead a caretaker government include Finance Minister Pier Carlo Padoan, Senate Speaker Pietro Grasso and Culture Minister Dario Franceschini. The country's mainstream parties have been preparing contingency plans to ensure a government would keep functioning if Renzi was forced out.
Renzi took office in 2014 promising to shake up hidebound Italy and presenting himself as an anti-establishment "demolition man" determined to crash through a smothering bureaucracy and redraw the nation's creaking institutions.
The referendum was to have been his crowning achievement.
However, his reforms so far had made little impact, and the opposition 5-Star Movement has claimed the anti-establishment banner, tapping into a populist mood that saw Britons vote to leave the European Union and Americans elect Donald Trump president.
Under Italian law, Renzi had to call a referendum on his plans to overhaul the constitution, but it was his decision to pin his future to the outcome, arguing that if Italy was not willing to accept his recipe for change he should leave office.
This move turned the vote into a defacto plebiscite on Renzi himself, uniting disparate opposition forces in a fierce battle to unseat Italy's youngest prime minister that played out over months of relentless campaigning.
The defeat does not necessarily mean that he will vanish from the political stage, as happened with Cameron in Britain.
Mattarella could ask Renzi to reconsider, calling on his sense of responsibility at a time of great market uncertainty. If however he refuses, the head of state will open a round of consultations with party leaders to find a new prime minister, who will have to draw up a new electoral law.
As head of the largest party in parliament, Renzi would have a big say on who should succeed him.
After voting in Genoa earlier on Sunday, Beppe Grillo, founder of the anti-euro 5-star Movement which backed the 'No' vote, said the country needed to go to new elections as soon as possible. His party was running neck-and-neck with Renzi's Democratic Party (PD) in the opinion polls.
The biggest immediate loser of the 'No' camp could be Italy's third-largest bank, Monte dei Paschi di Siena, which is bowed by bad loans and is looking to raise €5 billion euros ($7 billion) this month to stave off collapse.
Investors are likely to shun the operation if political chaos prevails, meaning a state intervention will be needed to save it. Several other lenders also need a cash injection to stay afloat raising fears of a domino-effect crisis.
The risk to stability, meanwhile, is enough to have the European Central Bank preparing to step in if needed.
Reuters, Bloomberg
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