Apprehensions in Europe ahead of Italian constitutional referendum

Italians are heading to the polls on Sunday to vote in a referendum on whether to adopt a new constitution which would take powers away from regional governments and the Senate.

Supporters argue the amendments will make it easier for stable governments to be formed and for important legislation to get passed as the government, of which there have been 61 since World War II, would no longer need the support of the Senate to remain in power.

The changes have been heavily pushed by Italian Prime Minister Matteo Renzi, who has said he will quit office if it does not pass.

"If 'Yes' wins, Italy will become the leader of Europe," Renzi, a reformist who rose rapidly through local government to claim his current title, told a large rally in his home city of Florence on Friday.

But polls suggest that the majority of Italians do not support the proposed reforms. This has led to fears that the result could lead to political instability – undermining the fragile economy and further weakening Italy's already struggling banks, putting the whole eurozone at risk.

Another concern among supporters of the EU is that anti-EU politicians such as Beppe Grillo, founder of the populist Five Star Movement, could fill the void left by Renzi if he resigns.

The uncertainty over what may happen following the referendum has disturbed European markets, leading Economy Minister Pier Carlo Padoan to attempt to calm fears by saying there was "no risk of a financial earthquake" if people vote against the changes.