Italian PM Matteo Renzi to resign on Wednesday

Matteo Renzi will resign as Italian prime minister on Wednesday evening, bringing an end to nearly three years in office after he suffered a stinging defeat in a referendum on his flagship constitutional reforms.

Mr Renzi announced his resignation on Twitter and his departure will be formalised with a visit to Sergio Mattarella, the Italian president, at 7pm on Wednesday. On Thursday, Mr Mattarella is expected to start talks with the country’s main political parties to form a new government and replace Mr Renzi as prime minister.

The aftermath of Sunday’s referendum has brought political instability to the eurozone’s third-largest economy, with uncertainty over how long a technocratic government might stay in office and when new elections might be held. A new vote could increase parliamentary support for anti-establishment parties that are hostile to Italy’s euro membership.

The political uncertainty comes as Italy needs to shore up its financial sector, with Monte dei Paschi di Siena, an ailing bank, trying to raise €5bn in fresh capital.

Before stepping down, Mr Renzi is expected to speak at a meeting of his own centre-left Democratic party, where reformist allies of the former mayor of Florence have been sparring with leftwing dissidents who opposed the constitutional reforms and now feel emboldened.

Mr Renzi had already said he would quit on Monday, after his camp lost the referendum by a large 60 per cent to 40 per cent margin, winning in only three of 20 Italian regions.

Mr Mattarella asked Mr Renzi to stay on until the passage of Italy’s budget in the Senate, which happened on Wednesday.

“The budget law is approved, formal resignation at 7pm. Thanks to all and long live Italy,” Mr Renzi wrote on Twitter.

Although Mr Renzi’s tenure in office began in 2014, one year after the last elections in 2013, and ended early, his government will still rank as the fourth longest-serving in postwar Italian history. Mr Renzi, 41, sought to pursue an aggressively reformist agenda, which he implemented only partially. He was ultimately brought down by his move to pursue changes to the political system that were disliked by many Italian voters.

While Mr Renzi saw them as essential to streamline Italy’s government, opposition members depicted them as a power grab that would excessively centralise power.

Assuming he is not unseated as head of the Democratic party, Mr Renzi is expected to maintain a central role in Italian politics as he gears up to make a comeback at the next general elections.

These are now more likely to be held in 2017 than at the expected end of the current legislature in 2018.

Challenging him in the next election will be the Five Star Movement, an anti-establishment party led by comedian Beppe Grillo; the Northern League, an anti-euro, anti-immigrant party led by Matteo Salvini; and Forza Italia, the centre-right party led by Silvio Berlusconi.

Meanwhile, Mr Renzi is expected to back the formation of a new, interim government led by another member of his party.

Among the most frequently mentioned names to replace Mr Renzi are Pier Carlo Padoan, the finance minister, Pietro Grasso, the president of the Senate, Dario Franceschini, the culture minister, and Graziano Delrio, the transport minister.