The Latest: German Business Worries About Italy Outcome

By The Associated Press
The Associated Press
The Associated Press
December 5, 2016 Updated: December 5, 2016

MILAN—The Latest on the Italian referendum (all times local):

12:10 p.m.

A German business group says it’s worried about the potential risks to the economy and Europe’s currency union posed by the outcome of Italy’s constitutional referendum.

The head of the Federation of German Industries, or BDI, says that “Italy must not put off resolving its pressing problems.” Ulrich Grillo said that the Italian state and economy need to be modernized to create jobs.

Grillo said that German industry is worried about the consequences of the referendum, which prompted Premier Matteo Renzi to announce his resignation. He said that “the risks of a new political instability for economic development, the financial markets and the currency union are increasing further.”

Italy is a major trading partner for Germany, Europe’s biggest economy.


12 p.m.

The head of the Northern League has called for an immediate election in Italy, energized by the decisive defeat of Premier Matteo Renzi’s constitutional reforms in a referendum.

Matteo Salvini says that “now I say that we need to vote as soon as possible.”

He rejected any need to pass a new electoral law before going to a general election following Renzi’s resignation expected later in the day.

Salvini, who has aligned himself with far-right leaders in Europe, said that “real change only happens through electoral victory.”

The current election law would hand a huge bonus of seats to the lower house while maintaining a proportional system for the upper house.


11:40 a.m.

Chancellor Angela Merkel’s spokesman says the German leader “took note with regret” of Italian Premier Matteo Renzi’s announcement that he would resign following his defeat in the constitutional referendum.

Spokesman Steffen Seibert said in Berlin that Merkel “worked very well and trustingly with Matteo Renzi, but of course the democratic decision taken by Italian citizens must be respected.”

Seibert noted that Merkel has supported Renzi’s reform efforts in the past, and said that Germany will offer to work closely with the next Italian government.


11:30 a.m.

Germany’s finance minister is calling for a calm response to the outcome of Italy’s constitutional referendum and says that there’s no basis to talk of it triggering a “euro crisis.”

Wolfgang Schaeuble said as he arrived for a meeting with his eurozone counterparts in Brussels that Italy needs a government that’s capable of acting and he hopes it will continue pursuing reforms despite the referendum result.

Schaeuble added: “I think we should take note of this with a degree of calm. The Italians have decided; we have to respect that. They will make the best of it.”

The minister said: “There is no reason to talk of a euro crisis and there is certainly no reason to conjure one up.”


11:25 a.m.

The head of the group of 19 countries that use the euro currency says there is no need for “emergency steps” after Italian voters rejected constitutional reforms.

Jeroen Dijsselbloem, who is also Dutch finance minister, tried to calm concerns that uncertainty after the Italian vote and prime minister’s resignation could weaken the euro.

He told reporters in Brussels that “it doesn’t really change the situation economically in Italy or in the Italian banks. It doesn’t seem to require any emergency steps.”

He also insisted that the Italian vote against a reform by pro-EU Prime Minister Matteo Renzi doesn’t mean that anti-EU forces will win in upcoming votes in France or the Netherlands.


11:10 a.m.

Ratings agency Standard & Poor’s says the rejection of Italy’s proposed constitutional reforms in a referendum will not affect its credit rating for the country.

S&P, which rates Italy at BBB-, said the proposed reform would have had potentially positive benefits. But its rejection “does not have an immediate impact on Italy’s creditworthiness.”

It added Monday that the vote outcome “does not have immediate implications for Italy’s economic or budgetary policies beyond likely near-term changes in Italian politics.”

Italian markets opened lower on Monday, but soon recovered to trade higher.


11 a.m.

Germany’s foreign minister has expressed concern about the result of Italy’s referendum, while lauding the loss of a right-wing populist in presidential elections in Austria.

Speaking during a visit to Greece, Frank-Walter Steinmeier said that while the result of the Italian referendum on constitutional reform, which has led Italian Premier Matteo Renzi to resign, was “not the end of the world,” it was also “not a positive development in the case of the general crisis in Europe.”

Italian Premier Matteo Renzi speaks during a press conference at the premier's office Chigi Palace in Rome, on Dec. 5, 2016. (AP Photo/Gregorio Borgia)
Italian Premier Matteo Renzi speaks during a press conference at the premier’s office Chigi Palace in Rome, on Dec. 5, 2016. (AP Photo/Gregorio Borgia)

Steinmeier said that Germany was watching the developments “with concern.”

The foreign minister said Renzi’s government had been moving in the right direction, and he said Germany hoped the new Italian government would continue along the same path.


10:40 a.m.

The European Union’s finance commissioner has played down the impact of Italy’s referendum on the euro and European unity.

Pierre Moscovici told reporters in Brussels that he has “full confidence in Italian authorities to manage this situation” after Italian voters rejected constitutional reforms and pro-EU Prime Minister Matteo Renzi announced his resignation.

With the euro trading lower on world markets, Moscovici said, “I’m very confident in the capacity of the eurozone to resist all kind of shocks.”

French Finance Minister Michel Sapin insisted that the Italian referendum “is a question of internal politics. The referendum wasn’t about Europe.”

Sapin and Moscovici hailed the victory of a left-leaning, pro-EU Austrian president and defeat of his far right challenger. Moscovici said: “Populism is not inevitable. The extreme right is not irresistible.”


9:50 a.m.

A senior European Parliament lawmaker from Germany says Italy’s reform referendum heralds a period of instability and is a setback for those who want to see reform in Europe.

Italian Premier Matteo Renzi announced his resignation after losing Sunday’s referendum on constitutional reforms. Asked what that means for Europe, Manfred Weber, the leader of the main conservative group in the European Parliament, told ZDF television: “Initially, a phase of instability now lies ahead of us—how will one of the biggest countries in the European Union now stabilize itself?”

He added that “it is also a setback for those who want readiness for reform, those who want European countries to change. That is the only way we can deal with globalization.”

Luxembourg’s foreign minister, Jean Asselborn, said the vote was an Italian domestic issue and he doesn’t see a defeat for Europe. He told German news agency dpa: “Italy voted on a reform. It would be wrong to extrapolate that now to the European level. It was a domestic political argument.”

He added, however, that “it would be bad for the euro if the government crisis dragged on for a long time.”


9:30 a.m.

Italy was plunged into political and economic uncertainty following voters’ resounding rebuke of Premier Matteo Renzi’s proposed constitutional reforms.

Renzi announced he would quit following Sunday’s referendum vote, in which 60 percent of voters rejected his reforms and signaled they wanted a change in political direction. Renzi is expected to hand in his resignation to President Sergio Mattarella later Monday.

The Milan Stock Exchange opened down 2 percent, but many bank shares were suspended due to excessive volatility meaning the hit could be even deeper.

The results hit Italy’s sovereign debt, increasing the spread on Italy’s 10-year bonds to 2 percent, from 1.7 percent on Dec. 1 and a record low of just over 1 percent last March and April.