Monday, 5th December: The result of the Italian Referendum dominated headlines this morning as Prime Minister Matteo Renzi admitted defeat as the “No” vote won the majority. The Italian voters were voting on whether the country’s second chamber should be stripped of some of its powers – a “Yes” vote would have meant that laws would need the approval of the lower house to be passed, as such speeding up the legislative process by reducing the powers of the upper house Senate and regional authorities. It was a reform that Renzi had claimed would bring political stability to Italy. About 33 million Italians, or more than two-thirds of eligible voters turned out. The result leaves the euro zone’s third largest economy in political turmoil as Renzi goes to see the Italian president, who will now have to decided whether to appoint a new PM or hold elections. As the result was announced through the night the euro fell but as European markets opened both the currency exchanges and European indices shook off any uncertainty.
The political saga continues in the UK as this morning Prime Minister Theresa May and her government party launched a challenge in the Supreme Court, challenging the High Court’s ruling in October that Parliament’s consent is needed before Brexit negotiations can go ahead. Theresa May has previously indicated she intends to trigger Article 50 by the end of March 2017 but should the Supreme Court dismiss the government’s appeal, with the appeal expected to last four days, May’s plans could, in theory, be blocked. The verdict from the appeal is expected in January.
The reaction to the Italian referendum was subdued in the UK – the FTSE 100 shaking off an uncertain start to spend the majority of the day in the green, led higher by miners, ending +0.24%,. Indices in Europe reacted stronger with the CAC in France closing +1.04% and DAX in Germany +1.63%. The Italian index itself closed lower by 0.21%. The Euro gained against both the pound and dollar and at the time of writing GBP/EUR is €1.18.