Referendum in Italy may have EU-wide impact

ITALY votes on Sunday in a constitutional referendum that, should there be a "no" vote, could trigger the departure of Prime Minister Matteo Renzi.

Following Donald Trump's election as US president, and the Brexit vote in June, the poll in the eurozone's third-largest economy is the latest political event in which populist forces could trigger international shockwaves.

While the formal topic of the referendum is landmark constitutional change, there are significant concerns about what a no vote could mean for instability in Italy, which is sometimes seen as the biggest threat to the eurozone's future. The country has the second biggest debt load in the single currency area at over 130 per cent of GDP (gross domestic product), and its banking sector is under significant stress with underperforming loans. Indeed, it is reported that up to eight of Italy's troubled banks could risk failing if the referendum is lost, with any ensuing market panic discouraging investors from recapitalising them.