In May’s runoff election, the candidates were separated by only a few thousand votes and after irregularities in the processing of postal votes the constitutional court overturned the result. The rerun, for which polls closed on Sunday at 10pm GMT was predicted to be equally as close. The results, finalised in the early hours of this morning which could have seen the nation elect the EU’s first far-right leader since the second world war in the form of FPO’s - Freedom Party of Austria - Norbert Hofer.
However, Alexander Van der Bellen emerged victorious with a convincing lead and 53.4% of the votes. Allowing European liberals to breathe a sigh of relief for a short period before their attention turned to the result of the Italian referendum.
*Breaking News* - Italian Prime Minister Matteo Renzi resigns after a clear 60% ‘no’ vote defeat in the referendum to reform the constitution.
Italian polling stations closed at 10pm GMT yesterday evening and counting began as markets await the announcement of the highly anticipated and pivotal referendum result.
In essence, Prime Minister Matteo Renzi’s proposed constitutional reforms include cutting the number of Senate members – who earn 6 times the average pay - from 315 to 100. While also reducing their power, currently equal to that of the Chamber of Deputies. Economists have estimated this could cut the cost of Italian politics by €500m a year and speed up law-making by ending decades of parliamentary ping-ping, while opponents have said the proposal would concentrate too much power in the prime minister’s hands.
Even though the referendum is regarding domestic constitutional reforms, implications of a ‘no’ vote could be felt in markets across the world with the possibility of Matteo Renzi, like David Cameron, responding to defeat by tendering his resignation. This could trigger a snap election and allow the Five Star Movement, led by Beppe Grillo - who aim to hold a referendum on leaving the Euro - gaining power. If this were to happen it would be Euro negative and may lead to an upward spike in rates for those with a Euro purchase requirement.
The result of this referendum has not only become key to showing the level of public approval for Matteo Renzi but also the scale of political upheaval we are likely to see due to the momentum nationalist right parties are gaining in Europe, with implications for next year’s elections in Holland, France and Germany.
Pound to Euro exchange rates are moving higher following the result of the Italian Referendum but Brexit uncertainty remains a key issue for Pound Sterling. With so much at stake, Clients may be prudent in making the most of the recent gains in the Pounds favour by getting in touch with their assigned broker. Alternatively, if you have never traded before but have a currency requirement, email me at firstname.lastname@example.org and Ill be happy to run you through the easy steps to sign up.
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