Italy's Renzi resigns, hints at early election

Matteo Renzi bowed out as Italian prime minister with a combination of jokes, regrets and a strong hint that he wants to lead his party into an early election battle.

Political consultations on forming a caretaker government were set to begin Thursday at 6 pm (1700 GMT), after Renzi formally submitted his resignation to President Sergio Mattarella following a crushing referendum defeat.

Before handing back the keys to his Palazzo Chigi residence, the 41-year-old chaired a meeting of the executive of his Democratic Party (PD).

"We are not afraid of anything or anybody, if other parties want to go to the polls .... the PD is not afraid of democracy or elections," Renzi said, in reference to opposition clamour for a nationwide vote due in early 2018 to be brought forward by up to a year.

Ironically, Renzi's rule came to an end with his government winning a vote of confidence in the Senate, the parliamentary chamber he tried to emasculate with a referendum in which he suffered a crushing defeat on Sunday.

The confidence vote curtailed prolonged discussion on the approval of Italy's 2017 budget -- an unfinished task which had prompted Mattarella to ask Renzi to delay his departure for a few days.

"Budget law approved. Formal resignation at 1900. Thanks to everyone and viva l'Italia!" ("long live Italy!") he tweeted. This being Italy, 1900 (7 pm) came and went, and Renzi had still not resigned.

Later Wednesday, the Moody's ratings agency downgraded its outlook for Italy's sovereign debt to negative from stable, saying the failure of the constitutional referendum slowed reform progress and left Italy more exposed to "unforeseen shocks".

(AFP)