Europe's Other Historic Referendum

Man with a plan.

Photographer: Alessia Pierdomenico/Bloomberg

The U.K. isn’t the only European country facing a historic referendum that could shape its domestic politics and its relationship with Europe for decades to come. Italians will soon be confronted with these issues, too.

Not to worry: There’s no immediate risk of an Italexit, or Uscitalia, whatever it would be called. Italy’s referendum, scheduled for October, is about part of Prime Minister Matteo Renzi’s plan to overhaul the country’s political system. But candidates from the country’s second-largest party, the euroskeptic Five Star Movement, have just won mayoral elections in Rome and Turin -- and as the party’s popularity increases, so may the chances for the Brexit-style referendum it favors.

Italy’s October referendum may not seem like a big deal. It is. The country’s odd constitutional setup -- which gives the upper and lower houses of its parliament equal powers -- has contributed to decades of revolving-door governments (63 since World War II, if you’re keeping track), which in turn enable bloated bureaucracies and political corruption. Renzi’s plan would reduce the Senate’s size and power, making it harder for it to bring down the government and making it easier to pass laws.

Without institutional reforms, Italy cannot have stable governance -- or the economic reforms required to deliver stronger economic growth and employment. Italy’s economy, while growing, is still smaller than it was before the 2008 financial crisis, and unemployment was just under 12 percent last year.

In contrast to Renzi, the Five Star Movement lacks coherent views on economic policy; it’s content mostly to blame Europe and globalization for Italy’s malaise. (To its credit, it also promises to tackle corruption and bureaucratic inefficiency.)

Between now and October -- and regardless of what happens in Britain this week -- Renzi should heed two lessons of the Brexit campaign. The first is that scaremongering is not constructive and often backfires. The second is that voters want to see a plan.

On that score, it’s hard to fault Renzi. His current proposal is just the latest part of the ambitious program of institutional reform he set out when he took office in 2014. Whether these reforms will do the trick is an open question; previous attempts to fix the voting system haven’t worked. But he deserves credit for trying.

To contact the senior editor responsible for Bloomberg View’s editorials: David Shipley at davidshipley@bloomberg.net.