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Analysts believe the outcome of the ballot on constitutional reform could have massive global implications. With many European leaders already coming under severe pressure from anti-EU parties ahead of elections next year the significance of the Italian result is huge. Defeat for Italian Prime Minister Matteo Renzi could lead to even deeper social turmoil in countries already struggling with austerity, immigration problems and a growing contempt for Brussels.

GETTY Opponents of Italian PM Matteo Renzi's reform plans hold a rally a the Colloseum in Rome

GETTY Matteo Renzi addresses a referendum rally

A victory of No could open a period of uncertainty on the political stability of the current coalition that has been always strongly committed on reforms Maria Paola Toschi

Maria Paola Toschi, global market strategist at JP Morgan Asset Management told CNBC: "The upcoming Italian referendum this December may create volatility across markets as the year draws to a close." Ms Toschi said the referendum is widely considered as political test for Italy and its leader Matteo Renzi. She said: "A victory for Yes could reinforce the empowerment of the current coalition on an ambitious program of reforms. "A victory of No could open a period of uncertainty on the political stability of the current coalition that has been always strongly committed on reforms."

GETTY Italian referendum Yes campaigners march in support of PM Matteo Renzi

Under the Italian constitution any new law needs to be approved by both the Chamber of Deputies and the Senate, often resulting in delays. But on December 4, the Italian public will get to decide whether they want to stick with the old way or shake things up by restructuring the legislative process by effectively reducing the second chamber's power. Mr Renzi has vowed to resign and abandon politics if the constitutional reforms were not passed and opponents appear to have seized on what they see as an opportunity to oust him and press ahead with their own populist anti-EU agendas. Ms Toschi said: "There is certainly a lot of interest on the upcoming Italian referendum and what its result may mean for the future of Europe's political stability.”

GETTY No campaigners make their views known at Rome's Colloseum

What countries are in the EU? Wed, September 14, 2016 In the wake of Brexit, we look at the 28 member states that are in the European Union. Play slideshow Getty 1 of 29 Countries that are in the European Union