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Live Briefing: Italy Uncertain After Vote; Victory for Far Right as Matteo Renzi Departs

Initial market reaction to the vote was muted because investors had anticipated the result, based on polls, and had already adjusted their portfolios.

“This is a critical point for restructuring of Italian banking system,” said Ángel Talavera, senior eurozone economist at Oxford Economics in London. Rebuilding the banks is “critical for the economy,” he said before the vote. Problems at Italian banks could spread across the eurozone. — JACK EWING

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How Far Is Europe Swinging to the Right?

Right-wing parties have been achieving electoral success in a growing number of nations.

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The far right rejoices in Europe.

The vote results and Mr. Renzi’s subsequent decision to step down drew a jubilant response from other populist leaders in Europe.

“Italians have disavowed the EU and Renzi,” Marine Le Pen, the head of the National Front in France, wrote on Twitter. “We need to listen to this thirst for nations’ freedom and for protection!”

With polls predicting that Ms. Le Pen will reach the 2017 presidential election runoff, she has sought to build an anti-establishment platform calling for a “Frexit” and a “People’s Spring.” The vote in Britain to withdraw from the European Union, a process known as Brexit, and Donald J. Trump’s recent victory in the United States have put wind in her sails.

The National Front’s vice president Florian Philippot, said on Twitter that the referendum in Italy was a “huge slap in the face of the EU and Renzi, its servant.”

The far-right Dutch politician Geert Wilders, who recently refused to attend his hate-speech trial, used Twitter to congratulate “Italia + Matteo Salvini,” a reference to the leader of the anti-immigrant Northern League. — BENOÎT MORENNE

Eurozone finance ministers face a tough call.

Finance ministers from 19 eurozone nations holding their monthly meeting in Brussels on Monday could find themselves facing a dilemma in the wake of the Italian vote.

Even as the so-called Eurogroup seeks ways to stave off a financial crisis, ministers from fiscally hawkish countries like Germany and the Netherlands will not want to be seen by their own electorates as overly permissive toward Italy.

“The only way Brussels can do much is to try and make sure that ordinary Italian citizens invested in their banks are not hurt too badly or have their savings wiped out,” said Mujtaba Rahman, the Europe director for the Eurasia Group, a political risk consultancy.

Failing to protect small creditors in Italian banks “will increase support for populist euroskeptic forces led by Grillo and the Five Star Movement,” Mr. Rahman said. “My concern is that the Germans and the Dutch will be more inclined to apply the rules to look tough on profligacy and keep populist forces at bay in their own countries.” — JAMES KANTER

Source: NYT > World

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