Italian Prime Minister Matteo Renzi is staking his future in Sunday’s referendum on the overhaul of the country’s constitution.
And the result could have consequences beyond Italy’s borders, with fallout feared for the European Union.
The main threat seen is a possible banking crisis in the heavily-indebted country, which analysts say is too big to save and too big to fail.
“If the no wins, the government will lose legitimacy and the opposition will gain power,” says Giovanni Collot, an Italian who works in Brussels.
“Having said that, I think that saying the banks will stop investing in Italy or that the European Union will treat Italy as a second class country, that’s exaggerated.”
Italian banks hold some 360 billion euros of bad loans, roughly 40 percent of all bad loans across the euro zone.
Many lenders are financially shaky and political instability could put off investors.
It is feared that a no vote could also feed into nationalism and populism in Europe.
Professor Mario Telo, from the Institute for European Studies, commented: “A victory of the no would fit in a big trend towards the emergence of nationalistic protectionist and populist forces in several western democracies, as a result of the globalisation in which the victims vote for extremist and nationalist parties.”