Italian bond yields fall to a 2-1/2-week low after the government pushes back the date for a high stakes vote to December, potentially giving it more time to win over a sceptical electorate. David Pollard reports.
Stage set for Italy’s high-stakes referendum
It’s a recipe, says its critics, for uncertainty.
But one thing is now certain: the date.
(SOUNDBITE) (Italian) ITALIAN GOVERNMENT UNDERSECRETARY, CLAUDIO DE VINCENTI, SAYING:
”Good evening everyone. The Council of Ministers has today agreed on the 4th of December for a popular referendum on the text of the law of constitutional reform …”
This is one YES to reform – polls indicate a swing to the NOs.
But if carried, fewer MPs will sit here in the Italian parliament.
And the upper house Senate will be drastically reduced.
The opposition says that would give too much power to government.
The risk for prime minister Matteo Renzi: losing power altogether.
SOUNDBITE (English) IHS GLOBAL INSIGHT, DIRECTOR OF SOVEREIGN RISK, JAN RANDOLPH, SAYING:
“There might be this popular anger, backlash, as we saw with Brexit against the Establishment and what the Establishment wants which is obviously for the referendum to pass. That could be hugely politically damaging for Renzi and who knows what the popular anger might be felt in this case with the referendum as a lightning rod.”
And in the interim, come other priorities …
Amid deep worry over its banks, Italy this week unveiling updated figures for the 2017 budget.
The Treasury has already said it’ll lower growth targets for this year and next.
(SOUNDBITE) (English) PANMURE GORDON CHIEF ECONOMIST, SIMON FRENCH, SAYING:
“The Italian economy hasn’t grown for almost 15 years now. And low structural growth rates due to very low fertility rates, low household formation, ageing population, quite an inefficient bureaucracy, legal system … you know, there’s a lot on the in-tray for Matteo Renzi.”
Renzi originally wanted to hold the referendum in early October.
A December date gave some relief to bond markets – and will allow more time for debate, say officials.
A ballot not just a gamble for Renzi – but also for 50 million other Italian voters.