Both a "yes" or a "no" vote in Italy's referendum on constitutional reform this Sunday could equal a positive outcome for the country's populist Five Star Movement, one analyst argued on CNBC's Street Signs.
Weighing up the different options, "the yes vote is a harbinger of risk," Christopher Granville, managing director at Trusted Sources Lombard, said.
The reform proposes a situation in which the "lower house of parliament … can get outright power … in a centralized system, because local governments would be downgraded as well," Granville explained.
He added that this would be "paradoxical" for the Five Star Movement. While Prime Minister Matteo Renzi's power – which is wedded to the reform's acceptance by the Italian electorate – would be cemented, the country would establish "a system where a challenger … could win outright power in the Italian state and take Italy out of the euro."
The Five Star Movement advocates a "no" vote, upon which Renzi has vowed to step down from his role.
"I wonder if that's a short sighted tactic on their part," Granville suggested.
The "yes" option benefiting the Five Star Movement in the long run is "a point which the market is missing," according to Granville, as it is currently priced in for the "no" victory which the party is currently pushing for. But, in the light of and 's victory in the U.S. election earlier this year, he added that "I think we've all learnt not to place too much trust in opinion polls."
The Five Star Movement advocate , with the potential for a new referendum on this issue.
Granville said that, despite the "pretty dismal economic performance" of major European economies like Italy and also France, restructuring membership of the single currency "would deliver a massive systemic shock to – not only European markets – but global financial markets." But, he did concede that "in Italy the scenario is a little more realistic than in France," where the country's own populist party, the National Front, is viewed by some to be within grasping distance of victory in next year's election.
While the market is anticipating a "no" on Sunday, with the potential for a leadership crisis in Italy, Granville voiced his reasoning that the referendum "doesn't lead in itself to any crisis straight away," as it "does not represent a critical path to any particular result."