Italy is entering a period of high uncertainty. Outgoing Prime Minister, Matteo Renzi, needs to unite his Democratic Party in anticipation of early elections. Renzi’s successor as Prime Minister, Paolo Gentiloni, needs to reform the country’s electoral laws in order to ensure that the next government will have a workable majority in both the Senate and the Chamber of Deputies. All this must take place against a backdrop of deepening problems stabilizing the Italian financial sector, mounting opposition to Renzi’s signature labor market reforms, growing disillusionment with Italy’s political class, and rising support for the populist Five Star Movement. The fate of Europe’s third largest economy hangs in the balance. The fate of the euro is implicated as well.
