Italy Sinks Into Political Limbo as Defeat Sweeps Renzi Away

Italy is Europe’s fourth largest economy and the country is falling “into political limbo after Prime Minister Matteo Renzi announced his resignation, with rival parties jockeying to fill the power vacuum following his crushing defeat in a constitutional referendum,” reports Bloomberg. The constitutional reforms were intended to reduce the size of parliament, putting limits on the Senate, and reduce overlapping processes between the central and regional governments. Global markets registered momentary alarm and then stabilized around the notion that the vote reflected more opposition to Renzi than the European Union and that the country will likely endure political gridlock rather than a rush to exit the European Union – though some analysts worry about the populist Five Star Party gaining more power. Bloomberg notes that Italian banks are vulnerable to government instability as some struggle to meet new capital holding requirements. In Austria, environmentalist Alexander Van der Bellen defeated Norbert Hofer, a populist, in a presidential runoff. – YaleGlobal