The prime minister of Italy was very hopeful of the new legislative policies that were supposed to overhaul the Italy legislation. However, the people of Italy felt differently. The prime minister has originally declared that he would resign should the legislation vote fails. The voters have completely rejected the proposed overhaul for the country’s legislature. The European Central Bank is set to deal with a major pressure. Matteo Renzi, the prime minister of Italy also has plans to resign now.
The banks of Italy will face a turmoil as an aftermath of this voting. The referendum provided hope that there will be a fresh start for the economy of the European Union. The No vote has however sealed the fate of the economy now as there is no room for improvement as of now. The European Economy is heavily indebted at the moment and it is the third largest economy in the world. This has made the banks more fragile, especially after the failure of the referendum.
While the Italy stocks fell initially, they rebounded after the government proposed that there will be no new election until 2018. It is expected that a caretaker government will be established before Christmas, eliminating the need for an immediate election. The Italian investors have also bet against a snap election and this has caused the stocks to recover. After falling about 4%, the shares increased by 0.5%. However, bonds are still under pressure.