If one thing emerges from 2016, it will probably be a resolve by politicians to curb their enthusiasm for referenda on complicated issues. The latest government to fall foul of “the will of the people” is the Italian government. A plebiscite which was designed to gain public approval of a radical reform of the Italian parliamentary system by reducing the powers of the Italian senate in a bid to streamline Italian politics by granting more power to the government was held on Sunday.
The trouble with a referendum is that whilst the ballot paper may have a simple yes/no question on it, the background to the issue may be hugely complicated (as in the Brexit vote). Also, the public may use the chance to vote on an issue dear to the government’s heart as a mechanism to give a kicking to “the establishment” by people who feel marginalised – a similar phenomenon was undoubtedly at play with the election of Donald Trump in the US Presidential election. In Sunday’s vote, the Italian PM had placed his job on the line, so some who might have been sympathetic to the cause of reform will have voted it down because of dissatisfaction with Mr Renzi.
In the event, the reform question was conclusively defeated on Sunday by a margin of 60% to 40% on a turnout of 70% of the electorate. This has plunged Italy into a political crisis since, true to his word, the PM has resigned. Italy is not due to go to the polls until 2018 and has to deal with a banking crisis which would not be helped by fresh elections.
In talks on Monday between the outgoing PM and the President, it was agreed that the PM would stay in place until after the 2017 budget has passed through parliament. It is widely expected that the President will invite somebody else to form a government rather than trigger early elections.
Market reaction saw the Euro stumble against other majors before strengthening significantly as the day went on. Markets also recovered after initial wobbles.
In Austria, the dual between the former leader of the Greens (Alexander Van der Bellen) and the far right FPO (Norbert Hoffer) which had been too close to call, ended in the election of Van der Bellen with a margin of 54 to 46%. The result has been seen as a potential turning of the tide of populism in Europe, the President-elect is staunchly pro-European.