Italy: All bets are off – Rabobank

The Italians have rejected a constitutional reform that would have improved the governability of their country notes Research Team at Rabobank.

Key Quotes

“Renzi has resigned and a caretaker government will likely be put in place to reform the electoral law. Early elections will follow, probably between mid-2017 and early 2018.”

“The initial market impact has been fairly muted, while it is just another blow for the economy. We expect economic growth to decelerate from 0.8% in 2016 to 0.6% in 2017.”

“We continue to see the ailing banking sector as Italy’s Achilles’ heel. The odds of a referendum on Eurozone membership haven’t increased after yesterday’s vote. If anything, the chance of a referendum has only declined.”