Italy’s Renzi quits after failed referendum

ROME — Italian voters dealt Premier Matteo Renzi a stinging defeat on his reforms referendum, triggering his resignation announcement and galvanizing the populist, opposition 5-Star Movement’s determination to gain national power soon.

The outcome also energized the anti-immigrant Northern League party, an ally of French far-right leader Marine Le Pen, a candidate in France’s presidential race.

The blow to Renzi also delivered a rebuke to Italy’s industrialists, banks and other establishment institutions, which had staunchly backed the referendum. The political upset, which could spook investors, comes just as the government had made inroads in cutting the staggering rate of youth unemployment and while Italy’s banks have urgent need for recapitalization.

During the campaign, the risk of political instability in Italy, Europe’s fourth-largest economy, triggered market reaction, with bank stocks sinking and borrowing costs on sovereign debt rising.

The Movement, led by anti-euro comic Beppe Grillo, spearheaded the No camp on the constitutional reforms, a package aimed at updating Italy’s Constitution that Renzi had depicted as vital to modernizing Italy and reviving its economy.

Characteristically confident — detractors say arrogant — Renzi, 41, and Italy’s youngest premier, had bet his political future — or at least his current premiership — on a Yes vote win, and campaigned hard for a victory in recent weeks to confound opinion polls indicating that it would likely go down to defeat.

With votes counted from nearly all the polling stations in Sunday’s referendum, the Nos outnumbered Yes votes in a 6 to 4 ratio, Interior Ministry data indicated. The turnout of 67 per cent was especially high for a referendum.

Leaders of the populist 5-Star Movement, which is led by Grillo, joined the chorus among opposition forces for early elections. The 5Stars are the chief rivals of Renzi’s party and are anxious to achieve national power for the first time.