Italian PM Matteo Renzi to resign in wake of referendum defeat

He will convene his cabinet for the last time on Monday afternoon

Italian PM Matteo Renzi to resign in wake of referendum defeat

Italian Premier Matteo Renzi speaks during a press conference at the premier's office Chigi Palace | Image: Gregorio Borgia AP/Press Association Images

Italian Prime Minister Matteo Renzi has said he will resign after losing a key referendum on constitutional reform.

Mr Renzi had staked his future on a "Yes" vote, vowing to quit if voters rejected his plans - which opponents denounced as dangerous for democracy - to reduce the role of the country's Senate and take back powers from regional authorities.

The result plunges the country into political turmoil, with the effects likely to be felt on the markets and across the rest of Europe.

"The experience of my government ends here," Mr Renzi said in a televised address to the nation.

Mr Renzi, who came to power in 2014, said he took full responsibility for the "extraordinarily clear" defeat, with projections suggesting the "No" camp, would win by a margin of 60% to 40%.

He will convene his cabinet for the last time on Monday afternoon and then hand in his resignation to President Sergio Mattarella.

Spearheaded by the populist Five Star Movement, the biggest rival to Mr Renzi's Democratic party, the "No" campaign took advantage of the Mr Renzi's declining popularity, a struggling economy and problems caused by tens of thousands of migrants arriving from Africa.

The vote is a major victory for Five Star leader Beppe Grillo, who urged Italians to follow their gut instincts.

But it is another blow to the European Union, which is struggling to overcome a number of crises and was keen for Mr Renzi to continue his reform drive.

Turbulence on the markets also looks inevitable, although they seemed initially to take Mr Renzi's departure in their stride.

Stocks and the euro fell in early trading in Asia but there were no signs of panic with the possibility of his resignation having already been largely factored in.

Some analysts fear a deeper crisis of investor confidence could derail a rescue scheme for Italy's most indebted banks, triggering a wider financial crisis across the Eurozone.

President Mattarella is now charged with brokering the appointment of a new government, or if that fails, ordering early elections.

Mr Grillo called for an election to be called "within a week" on the basis of a recently adopted electoral law which is designed to ensure the leading party has parliamentary majority.

Many analysts think the most likely outcome is that Mr Renzi's administration will be replaced by a caretaker one dominated by his Democratic Party which will carry on until the next election, which must be held by spring 2018.

After the Brexit vote and Donald Trump's victory in the US presidential election, the result is likely to be interpreted as another victory for populist forces and a potential stepping stone to government for Mr Grillo's Five Star.