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What Renzi's 'extraordinary' comeback means for Italian politics

Former Italian Prime Minister and PD secretary Matteo Renzi casts his vote for Democratic Party leadership primaries on April 30, 2017 in Pontassieve, Italy.
Laura Lezza | Getty Images
Former Italian Prime Minister and PD secretary Matteo Renzi casts his vote for Democratic Party leadership primaries on April 30, 2017 in Pontassieve, Italy.

Former Italian Prime Minister Matteo Renzi regained the leadership of the governing center-left Democratic Party (PD) with a comfortable victory on Sunday, partially completing his political comeback just five months after tendering his resignation.

According to partial results, Renzi secured over 70 percent of the vote in Sunday's primary. Around 2 million people reportedly cast their ballots in makeshift voting booths around the country, which had been widely regarded as a key test before a general election due early next year.

Sunday's overwhelming triumph for Renzi marked the first step of his ambitious and prompt bid in becoming Italy's premier once again. The animated Florence-born politician, previously dubbed the "demolition man" for his ambitious reformist policies, faced an embarrassing constitutional referendum defeat in December and was subsequently forced to resign.

'Extraordinary responsibility'

"This is an extraordinary responsibility. Heartfelt thanks to the women and men who believe in Italy," Renzi wrote in an Instagram post shortly after his victory was confirmed on Sunday.

The PD will now begin preparations for parliamentary elections due next May.

"Most probably the next parliament will be a parliament with no majority… It may be a situation like the one we have seen in Spain," Giampaolo Galli, a member of parliament for Renzi's Democratic Party, told CNBC on Tuesday.

Spanish Prime Minister, Mariano Rajoy, currently leads a minority government having lost support to newcomer parties in a general election last year. According to the latest opinion polls, Renzi's PD remains between 2 and 8 points behind the anti-establishment and anti-euro Five Star Movement (5SM) party.

"There may be a need to call for a new election (and) there may be a need for creating coalitions which are rather unnatural," Galli added.

'Cannot rule out snap elections'

Meanwhile, Barclays economist Fabio Fois stressed that despite Renzi's reelection on Sunday, a lack of meaningful reform to the country's voting system would mean it is unlikely for snap elections to be held as soon as Fall this year.

"(However) should the electoral rule be improved in a way that minimizes the risk of post-election paralysis, we cannot rule out snap elections being called earlier, possibly in September/October this year," Fois said in a note.

In the event of a snap general election, Italy's economic problems could quickly move to the foreground as lingering banking sector worries, stagnating productivity and sky-high public debt levels all continue to trouble investors.

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