ROME, Dec 5 (Reuters) – Italian Prime Minister Matteo Renzi vowed to resign after suffering a crushing defeat on Sunday in a referendum on constitutional reform, tipping the euzo zone’s third-largest economy into political turmoil.
His decision to quit after just two and a half years in office deals a blow to the European Union, already reeling from multiple crises and struggling to overcome anti-establishment forces that have battered the Western world this year.
The euro fell to 20-month lows against the dollar, with markets worried that instability in the euro zone’s third largest economy could reignite a dormant financial crisis and deal a hammer blow to Italy’s fragile banking sector.
Renzi’s resignation could open the door to early elections next year and to the possibility of an anti-euro party, the opposition 5-Star Movement, gaining power in the heart of the single currency. 5-Star campaigned hard for a ‘No’ vote.