Italy heads to the polls with Renzi’s future at stake

Italians headed to the polls on Sunday to vote in a referendum on constitutional reform which will decide the political future of Prime Minister Matteo Renzi, who has promised to resign if he loses.

Voters are deciding whether or not to approve sweeping changes to Italy’s constitution and parliamentary system, which would see the power of the second chamber (the senate) being limited to make it easier for the government to enact legislation.

The reforms would also take the number of senators down from 315 to 100, and source them from regional government rather than through direct election.

Renzi has argued that the reforms would increase political stability and give the government more flexibility to tackle enduring economic problems.

“In 48 hours, we are playing for the next 20 years. The results are on a knife’s edge,” Renzi said in his last campaign rally on Friday night.

Opposition to the reform has been led by Italy’s second most popular party, the anti-establishment Five Star Movement, which has attacked the changes as a power grab by the ruling Democratic party, and said a ‘No’ vote represents a vote against the country’s political establishment.

Another opponent, former premier Silvio Berlusconi, the leader of the centre-right Forza Italia party who in the past has praised fascist dictator Benito Mussolini, has said approving the reforms could open the door to dictatorship in Italy.

Polls opened at 7 a.m. with about 51 million Italians eligible to vote.

With all the opposition parties lined up against the reform, a victory for Renzi would be a surprise and represent an enormous personal triumph for Italy's youngest prime minister who often appeared to be fighting the campaign single-handed.

All surveys published in the month before a blackout was imposed on Nov. 18 put the 'No' camp ahead. Private polls have continued to be conducted in the last two weeks and bookmakers say 'No' remains the clear favourite to win.

However, in the final days of frenetic campaigning Renzi insisted the public mood was changing, focusing his attention on the millions of Italians who said they were undecided.

Turnout, expected at between 50 and 60%, could be crucial. Pollsters say lower participation could favour Renzi, as hostility to his reform is strongest among young voters and those in the poor south, segments of the population that often don't bother to vote.

With bookmaker; odds suggesting a roughly 75% chance of a win for 'No', speculation is rife on what Renzi will do in the event of defeat.

It is not yet clear what might happen if Renzi does step down, but the next steps would be determined by Italy’s relatively new president, Sergio Mattarella, who could cobble together a new government and install a new prime minister, such as Pier Carlo Padoan, who currently serves as finance minister.

But there are already signs that Mattarella would come under intense pressure by the Five Star Movement and the rightwing Northern League to immediately call a new election in the event of a no win.

If Renzi ekes out a victory, the news would likely be celebrated by the markets and would be seen as a defeat of rising populist sentiment.

Italy has been depicted as the latest possible domino to fall following the UK’s vote to leave the EU and the election of Donald Trump, but some analysts say the comparisons have been overblown, especially concerns that it could lead to a referendum on the euro or even Italy’s exit from the EU.

Economy Minister Pier Carlo Padoan sought to calm nervous markets on Friday, saying there was “no risk of a financial earthquake” if ‘No’ wins, though there may be “48 hours of turbulence”.