Following his defeat by a 60/40 margin – far bigger than expected – Italian Prime Minister Matteo Renzi has confirmed that he will resign.
Renzi’s resignation will not lead to the immediate collapse of Italy’s centre left government. Nor will it result in fresh elections.
The most likely outcome is that the Italian President will nominate a technocratic Prime Minister from within Renzi’s coalition to take over as Prime Minister until elections take place in 2018. In the meantime an attempt will probably be made to reform the electoral system to prevent the insurgent Five Star Movement – which together with Italy’s Northern League led the campaign for a No vote – from forming a majority government if it comes first in a future election.
Whilst Italy’s current political establishment will therefore likely remain in control at least a while, its authority and credibility has nonetheless been severely damaged by the emphatic No vote, which was called for by the insurgent anti-EU and anti-euro parties.
This also comes as Italy wrestles with a festering crisis in its banking system, which the Italian government – now lacking authority and without Renzi’s leadership – may struggle to bring under control.
It seems that Italy and Europe can look forward to more turbulence ahead.