The political intention alone would face a market backlash, according to JPMorgan Chase & Co. economists. “Any credible noise about euro exit would induce capital flight and severe market turmoil, so that market pressure might force parties that campaigned for euro exit to quickly revise their plans,” London-based economists Gianluca Salford and Marco Protopapa said in a note. Markets are showing stresses even ahead of the Dec. 4 referendum because of what it might unleash. In addition to the euro’s more than 3 percent slide this month to the lowest level since March 2015, heightened risk is also signaled by Italy’s 10-year bond yield climbing above 2 percent for the first time in more than a year.
6. Do Italians want to leave the euro?
Apparently not. A poll published Nov. 21 by La Stampa, and carried out by Community Media Research and Intesa Sanpaolo SpA, found that only 15.2 percent of the population were in favor of leaving the single currency, with 67.4 percent declaring themselves true single-currency believers.
7. So there’s nothing to worry about?
These are just the known unknowns. What is certain is that Renzi losing next month’s referendum would mean political and economic turmoil. Just how much is your call.
The Reference Shelf
- What Italy’s referendum is about.
- A story on how Renzi’s party would seek early elections by summer 2017 if it lost.
- A story on how, following successes in Britain and the U.S., populists are setting their sights on the next five dominoes at risk.
- How Italy’s referendum puts Renzi’s future in voters’ hands.