Italians are heading to the polls to vote on a referendum that is seen as a test of rising populist forces in the country against the political establishment, in a contest that could end in the resignation of centre-left prime minister, Matteo Renzi.

Voters are deciding whether or not to approve sweeping changes to Italy’s constitution and parliamentary system, reforms that Renzi has argued would increase political stability and give the government more flexibility to tackle enduring economic problems.

“In 48 hours, we are playing for the next 20 years. The results are on a knife’s edge,” Renzi said in his last campaign rally on Friday night.

Opposition to the reform has been led by Italy’s second most popular party, the anti-establishment Five Star Movement, which has attacked the changes as a power grab by the ruling Democratic party. Another opponent, former premier Silvio Berlusconi, the leader of the centre-right Forza Italia party who in the past has praised fascist dictator Benito Mussolini, has said approving the reforms could open the door to dictatorship in Italy.

In polls leading up to the vote on Sunday before a national polling blackout, Renzi’s yes campaign lagged about five points behind the no campaign, with about a quarter of Italian voters undecided on the referendum. On Friday, it was reported that 40% of eligible Italians abroad cast ballots in the referendum, a voting bloc that in recent elections has favoured Democrats and could prove to be decisive in a close contest.

If no wins the race, as polls have predicted, Renzi has vowed to resign. It is not yet clear what might happen if Renzi does step down, but the next steps would be determined by Italy’s relatively new president, Sergio Mattarella, who could cobble together a new government and install a new prime minister, such as Pier Carlo Padoan, who currently serves as finance minister.

But there are already signs that Mattarella would come under intense pressure by the Five Star Movement and the rightwing Northern League to immediately call a new election in the event of a no win.

If Renzi ekes out a victory, the news would likely be celebrated by the markets and would be seen as a defeat of rising populist sentiment.

Italy has been depicted as the latest possible domino to fall following the UK’s vote to leave the EU and the election of Donald Trump, but some analysts say the comparisons have been overblown, especially concerns that it could lead to a referendum on the euro or even Italy’s exit from the EU.



Wolfango Piccoli, an analyst at Teneo Intelligence in London, said Italy was on track to make changes to some of its election rules that would probably hamper the M5S in the future, no matter what the outcome of the referendum is.

“The M5S is [also] unwilling to govern as part of a coalition given its fiercely independent stance. In other words, mainstream parties will hold on to power, but governance will suffer,” Piccoli said.

He said the legal and political threshold for a possible “Italexit” was very high, and would require votes in parliament and a possible referendum. While Euroscepticism is on the rise, there is no overwhelming consensus against the single currency or EU membership.

On Saturday, a day when rules prohibited either side from campaigning, the toxic tone of the race and the divisions it exposed – even though the topic at hand was far less emotionally divisive than hot-button issues in the past such as divorce, abortion, and nuclear energy – was seen by the editor of La Repubblica as a defining moment in Italian history.

The traditional party structures had broken down, Mario Calabresi wrote in a front-page column, and politics had turned into a “showdown between those who feel they are sliding down versus those who are considered to be the establishment, a fight to the death between pieces of the political class, between the destroyers and the destroyed”.

He wrote: “It is a division that not only crosses through a party like the Democratic party, but communities, friends and family.”