UBS: Italy: Renzi concedes defeat and plans to resign

"No"

The referendum exit polls suggest that the Italian public has voted to rejectthe government's proposals for constitutional reform. The margin of defeatfor the government looks to be larger than expected, somewhere in theregion of 59% for "No" and 41% for "Yes" (source: LA7), according to theexit polls and votes already counted, at the time of writing. The participationrate was much higher than expected and could give the result greaterpolitical significance.

Prime Minister Matteo Renzi made a speech soon after the polling stationsclosed, conceding defeat, indicating that his time in government is at anend. He will convene a cabinet meeting and hand in his resignation toPresident Sergio Mattarella on Monday afternoon. There is a small chancethat he will remain in office as the president could ask him to lead the nextgovernment. If he rejects, which we think is likely, Mattarella will look tofind a new technocratic leader for the country. Current candidates beingmentioned include Pier Carlo Padoan (finance minister, and seen as themarket's favored option), and Graziano Delrio (favored by the DemocraticParty) who could be considered as a more political appointment. Ourassumption is that whoever is asked to form the next government wouldwin the confidence of parliament, reducing the chances of a snap electionsoon.

Electoral reform is high on the agenda

The key focus of the government in the months ahead will be on reformof the current electoral law (the so called the Italicum law), in our view. Tobe sure, a fair amount of time will also be dedicated to the restructuringcurrently taking place in the banking sector, but the established parties willbe keen to see changes to the Italicum law before fresh elections are held.We expect that this process will not be complete until 3Q17, meaning that4Q2017 may be the earliest date that we envisage an election.

Der vollständige Beitrag als pdf-Dokument