Italy's Prime Minister Matteo Renzi has suffered a crushing defeat in a referendum on constitutional reform. He presented his resignation to Italian President Sergio Mattarella on Monday.
But Mattarella asked Renzi to postpone his resignation until parliament approves the 2017 budget, in the interest of easing political uncertainty in the country and across Europe.
Another referendum called and another surprise referendum lost. The defeat for Italy's pro-European Prime Minster Matteo Renzi was a coup for the so-called alt-right and the anti-establishment forces.
On the heals of the Brexit vote in June, the UK’s withdrawal from the European Union, and Donald Trump’s US presidential election victory last month, many are asking whether Italy will be the next domino to fall in the wave of populism? Could Italy’s political drama lead to a new Eurozone crisis?
“We are not going to see an Italexit. It was a referendum on Mr Renzi. Those who won include the extreme right, extreme left and anti-populists who are not used to working together,” said Giovanni La Via, Italian European People's Party.
Italy, the third largest economic member of the Eurozone, is viewed as a pro EU state, unlike the UK.
For Socialist MEP Claude Moraes, the situation is far too complex to point a finger at just one common denominator - populism.
“You are getting people through insecurity, through wages that haven't risen in many countries – Britain is an example and of course identity politics. People will suffer during this period because the solutions don't lie in demagoguery, blaming other people," he said.
But politics isn't Italy's only problem. There are concerns that a sovereign debt crisis looms. That coupled with the momentum provided to anti-establishment forces could see some very hard months ahead for Italy.
“If populist parties come to power, they may express their disagreement with the austerity policy of Germany. Will it lead to the breakup of the Euro? No, but will make our lives more difficult, certainly yes,” said Bruno Colmant, Economic Advisor, Bank of Degroof Petercam.
So is a crisis looming? If mainstream Eurocrats can deliver on a better Europe and find a message that speaks to those on the fringes, it may be kept at bay.
