Italy is set to announce the date of its key constitutional referendum Monday with investors and political analysts seeing the vote as a further major political risk for Europe.
The Italian government is expected to announce the date on referendum on constitutional reform on Monday. Late November or early December are being mooted as the likeliest dates for the vote – later than originally planned.
The referendum is based on constitutional reform of Italy's Senate and is designed to streamline the legislative process by effectively decreasing the second chamber's power. Currently, any law in Italy needs to be approved by both houses of parliament, the Chamber of Deputies and the Senate, often leading to delays in effecting new laws and reforms.
The vote has the potential to shake up Italian politics dramatically, and the economy, as Prime Minister Matteo Renzi has said he will resign if he loses. That, in turn, could see vital economic reforms delayed or abandoned and more political instability in the country at a time when it needs it most.
In addition, Italy is already facing a potential banking crisis, zero growth (as of the second quarter) and struggling to deal with the refugee crisis.
Despite making the vote effectively a vote of confidence in his leadership, Renzi told CNBC in August that he was very confident that the reform would meet with the public's approval.
Vincenzo Scarpetta, political analyst at Open Europe, told CNBC that the most likely dates for the vote was Sunday 27th November or Sunday 4th December. Renzi had originally said that early October could be the date for the vote.
The analyst believed that Renzi was trying to delay the upcoming referendum in the country to allow for more campaigning and said the result would be tight.
"What he's trying to do at the moment -- after strongly personalizing this vote -- is to row back and to focus on the substance of the vote rather than his political future," Scarpetta told CNBC on Monday.
"The vote is inevitably not just going to be a vote on the substance on the reform, it's going to be a vote on the state of the economy, a vote on unemployment, a vote on Renzi as a person. I would say that there's a probability of 55 (percent) to 45 (percent) that Renzi is likely to win it but it's a golden opportunity for the opposition parties to campaign against it and force Renzi out of power."