The Italian constitutional reform referendum this autumn will, or rather should, cause European investors to hold their breath more anxiously than they did on the morning of 24 June. Citigroup has called the referendum “the single biggest risk to the European landscape this year,” bigger than the United Kingdom’s leave vote. Renzi leaving, which he said he will do if he loses, could pave the way for the euro-sceptic Five Star Movement, potentially leading to a political crisis on top of its economic crisis. On the other hand, a Renzi win could lead to proper structural reform in Italy. The referendum is essentially about streamlining the Senate from 315 to 100 members in order to drain it of some of its power. The Senate’s ability to bring down governments is one of the reasons why Italy has had so many in the post-World War era. Much needed political reform aside, two other major issues that Italy needs to deal with is the inefficiency of its economy and the related liquidity issue of the country’s banking system. – See more
Renzi leaving, which he said he will do if he loses, could pave the way for the euro-sceptic Five Star Movement, potentially leading to a political crisis on top of its economic crisis. On the other hand, a Renzi win could lead to proper structural reform in Italy. The referendum is essentially about streamlining the Senate from 315 to 100 members in order to drain it of some of its power. The Senate’s ability to bring down governments is one of the reasons why Italy has had so many in the post-World War era. Much needed political reform aside, two other major issues that Italy needs to deal with is the inefficiency of its economy and the related liquidity issue of the country’s banking system. – See more
The Senate’s ability to bring down governments is one of the reasons why Italy has had so many in the post-World War era. Much needed political reform aside, two other major issues that Italy needs to deal with is the inefficiency of its economy and the related liquidity issue of the country’s banking system.
[Source: Portfolio Adviser - by Karin Wasteson - September 2, 2016]
