December 14, 2016 / 2:52 PM / 7 months ago

Italian PM seeks Senate backing as fresh referendum looms

3 Min Read

ROME, Dec 14 (Reuters) - Italian Prime Minister Paolo Gentiloni sought the backing of the fragmented Senate for his new government on Wednesday as a fresh threat emerged to the legacy of his predecessor Matteo Renzi.

Gentiloni won a vote of confidence in the lower chamber of parliament on Tuesday and needs to secure a similar vote in the upper house Senate before his government can take office.

Renzi resigned last week after voters rejected his constitutional reform plan in a referendum. Another of his flagship projects, a shake-up of the labour market, could suffer the same fate with Italy's main union demanding a plebiscite on the law.

Italy's Constitutional Court said on Wednesday it would review the request on Jan. 11. If it gives the green light to the CGIL union, a referendum on the Jobs Act could be held before next summer.

Business leaders denounced the move to overturn the reform, which made it easier to hire and fire workers, and the labour minister told reporters the union initiative made it more likely that national elections would be brought forward.

Following the referendum defeat, Renzi supporters fear the anti-establishment drive will push Italians to shoot down the Jobs Act. By bringing forward the national vote, the referendum would be automatically delayed by up to 12 months.

"It seems to me that the prevailing attitude is to go to elections soon, before any referendum on the Jobs Act," said Labour Minister Giuliano Poletti.

Stung by his Dec. 4 referendum defeat, Renzi has said he wants elections by next June, a year ahead of schedule, but a new electoral law needs to be drawn up first.

In a speech to the Senate, Gentiloni said his government, which is a virtual carbon copy of the previous administration, would seek cross-party consensus on the new law.

Many senators representing opposition parties quit the chamber before Gentiloni spoke to protest over the make-up of the new cabinet, saying the recent referendum showed Italians did not want continuity but rather a new beginning.

Gentiloni's room for manoeuvre in the 320-seat Senate is tighter than in the lower house, with the two main coalition parties controlling little more than 140 seats. However, smaller factions have indicated they will back Gentiloni for now, which should give him a majority of at least eight seats.

One of the first problems awaiting the new government is a gathering banking crisis.

Monte dei Paschi di Siena. Italy's third-biggest lender, needs 5 billion euros ($5.3 billion) of fresh cash before the end of the year to stay afloat and is widely expected to seek funds from the state to stave off collapse, bankers say. (Additional reporting by Francesca Piscioneri; Editing by Gareth Jones)

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