Europe worried about outcome of Italy’s referendum

Italian Prime Minister Matteo Renzi speaks during the last rally for a "Yes" vote in the upcoming constitutional referendum, in Florence, Italy, December 2, 2016. (Photo by Reuters)

Italians are expected to vote in an upcoming constitutional referendum, the result of which could raise the possibility of the country’s exit from the euro single currency, a worrisome issue for the European Union already grappling with Brexit.

The referendum will take place on Sunday on Prime Minister Matteo Renzi’s proposed changes to the constitution that will reduce the role of the Senate and rein in the powers of regional governments.

He has argued that the reforms will increase political stability in the European country. However, opponents fear that the constitutional changes will lead to an excessive centralization of power.

In a final appeal in the city of Florence on Friday, Renzi called on Italians to support his reforms, saying the country could become Europe's strongest nation if the “Yes” vote wins.

Renzi has promised to resign if he loses the Sunday ballot, with the members of his Democratic Party vowing early elections in 2017 in that case.

This is while all opinion polls over the past month suggested that the Italian premier is likely to lose the ballot.

"Renzi's risk of losing is fairly high," said head of the Piepoli Institute, an Italian polling firm.

A No vote could further boost the country’s opposition parties, among them the eurosceptic Five Star Movement, all of which favor exiting the euro.

Italy is the eurozone's third-largest economy, but its stock market has been the worst performer in Europe this year due to problems in its banking system and concerns over political instability.