Italy and Austria Election Outcome

December 7th, 2016 – Europeans rode an emotional roller coaster on Sunday. Up, then down.

The resignation of Italy’s Prime Minister Matteo Renzi in the early hours of Monday signalled what so many had feared, that his referendum on political reforms inside Italy would reverberate across all of Europe
.Italy's Prime Minister Matteo Renzi gestures during a news conference in Rome, Italy, April 7, 2016. REUTERS/Remo Casilli

What is the political impact of a ‘no’ vote? 

Mr Renzi has followed through on his promise to resign if he lost the referendum – something that has sparked huge political uncertainty. If there is a snap election, the anti-establishment Five Star Movement could rise to power and call a referendum over Italy’s membership of the eurozone.  The referendum result could hit Italy’s banks which remain vulnerable after huge amounts of bad loans led to bank shares falling dramatically.  Mr Pastakia said: “Italian banks’ ability and willingness to support investment remains a key headwind to economic growth, given high levels of non-performing loans (NPL).

As the votes were tallied, the value of the Euro dropped by some 14 percent against the U.S. dollar, only to rebound later on Monday. It was the lowest the euro had been since March 2015. “Renzi made the big mistake of making this about his leadership,” says Rula Jebreal, a foreign policy analyst and Italian journalist, who noted that Italians are notoriously cautious about giving one person or one party too much political power.

Presidential candidates Norbert Hofer of the Freedom Party (FPOe) and Alexander Van der Bellen (L) who is supported by the Greens party, shake hands before a TV debate after the Austrian presidential election in Vienna, Austria, May 22, 2016. REUTERS/Heinz-Peter BaderAustria

Austrian voters roundly rejected on Sunday a candidate vying to become the first freely elected far-right head of state in Europe since World War Two, halting at least temporarily the wave of populism sweeping Western democracies. The runoff vote was a litmus test, since it was a re-run of a vote held in May, before Britain voted to leave the European Union and Americans elected Donald Trump as president. Norbert Hofer of the anti-immigration Freedom Party lost the May election by less than a percentage point, and polls had for months shown the race too close to call.

But Hofer’s appeal might have waned since May in part because of the EU’s success in stopping migrants from getting to Austria’s borders. The so-called Balkan route was shut down with the help of Turkey and Greece. So while last year close to one million migrants passed through Austria, helping Hofer’s anti-migrant message resonate through Austria’s eight million population, it had lost some of its potency come the December vote


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