Italy, a country notorious for a 'relaxed' attitude towards making reforms, is set to vote on the most significant changes to its current constitution since it was brought into effect in 1948.

If the law is approved it will make profound changes to the way the parliamentary system works, recentralising various powers that had been shared between the central and regional governments.

Why is there a referendum?

The referendum will close a year that has seen a number of popular consultations on significant issues, such as the European Union membership in the UK, acceptance of refugees quotas in Hungary and the EU-Ukraine trade deal in the Netherlands, often with controversial results.

The Italian vote is different from the others in a number of ways. Firstly, it is mandated by law, as Matteo Renzi's government is seeking to modify significant parts of the country's constitution but failed to win the required two thirds of Parliament's support for the reform.

According to the constitution, it is now up to the Italian people to approve or reject the changes – unlike in the UK, where holding the Brexit referendum was former prime minister David Cameron's choice.

Also, the referendum has no quorum, so a simple majority of the votes, regardless of the' turnout, will make the decision legal and legitimate – unlike in Hungary, where a majority of the voters rejected EU-imposed migrant quotas but failed to reach the quorum necessary to make the vote valid.

Matteo Renzi
Italian Prime Minister Matteo Renzi gestures during a press conference Andreas Solaro/ AFP

Finally, the vote is on a purely internal matter affecting Italian laws, lawmaking and politics, unlike the vote in the Netherlands that influenced the future of a complex agreement between a union of 28 countries and a country troubled by conflict.

So why is there such a strong interest for the Italian constitutional referendum?

Why does it matter?

The vote is seen as a test of popularity and strength for Prime Minister Renzi and his government, which has been in power for two years but is yet to face a general election. A few months into his time as prime minister, Renzi won a massive 40.8% of votes in the 2014 European parliamentary elections, making his Democratic Party the biggest one in Europe.

Fast forward to Summer 2016, and the Democratic Party has lost control in local elections of key cities like Turin – which had been dominated by centre-left politics for 23 years – and Rome – where the party was embroiled in a large corruption scandal, to the Five Star Movement – the biggest opposition party in the country.

Matteo Renzi campaigns for Yes vote
Italian Prime Minister Matteo Renzi talks during a meeting in support of the 'Yes' vote in the upcoming constitutional reform referendum in Rome, Italy November 26, 2016. Alessandro Bianchi/Reuters

Renzi's self-confessed biggest mistake in the referendum campaign was his bravado in declaring for months that he would resign if the reform was rejected at the ballots. After the negative results of the administrative election, it became apparent that the vote was not going to be an assured victory and Renzi's rivals would frame the referendum as a way to organise popular discontent and enforce a change of government.

The latest polls, published on 18 November (Italian law forbids the publication of polls after a certain date) saw the vote against the reform winning with at least 5% majority, but more than a third of voters were still undecided.

Renzi's tone in the campaign has changed significantly, and his message now is that the referendum is not a vote on the government. "We need a strong government. The referendum is important also from a political perspective, but it is not about the government," he said in a speech in Rome on 26 November.

Regardless, speculation about the Renzi administration's future has become a central point of discussion on Italian media. Speaking at a campaign event in Turin on Sunday (27 November), Renzi said there is a "risk" of a technocratic government. "I can't avert [the risk of] a technocratic government, you have to avert it with a 'yes' vote. There is a risk, it is evident," he said.

Casting further doubt over his government's future, he added: "There will be an effect on the government, of course. I am not in politics to add a line to my CV."

Beppe Grillo campaigns for No vote
Beppe Grillo, the founder of the anti-establishment 5-Star Movement, stands next to with Rome's Mayor Virginia Raggi during a march in support of the 'No' vote in the upcoming constitutional reform referendum in Rome, Italy November 26, 2016. Remo Casilli/REUTERS

What does the reform say exactly?

The reform seeks to change more than a quarter of the Italian Constitution, 36 of 139 articles. The major impact would be on the size and function of the Senate, the second house of parliament currently seating 320 senators, whose role is exactly the same as that of the chamber of deputies. The reform seeks to move away from the two-chamber Parliamentary system, which was originally devised as a protection against the rise of another Mussolini-style dictator.

There are roughly half the number of senators than deputies. They are elected by people over 25 years of age and they need to be at least 40 years of age to be elected. The reforms would see the Senate seating 100 members, divided between 74 regional councillors, 21 mayors and five nominees from the President of the Republic. The way these members would be selected remains unclear and it is one of the reasons why critics fear the reform would diminish democratic accountability.

The Senate will only be required to propose and vote on laws affecting the constitution, the relation to the European Union and to regional and local governments. For all other issues, it has a limited amount of time to require a review and propose changes to laws voted by the chamber of deputies, which is free to dismiss the senate's advice.

The referendum also alters the process of election for the President of the Republic, which currently requires a vote in both chambers, plus 54 regional delegates. Under the new reform, only the 630 parliamentary members plus the 100 senators would vote, and the majority required to make the vote valid would also be lowered progressively in the voting sessions.

There would also be a redefinition of the powers exercised by the central state and regions. The regional governments' powers will be limited to certain areas, such as support for business, local development and health and educational services, rather than shared with the central government, which would retain absolute control over areas such as international trade, energy, and infrastructure projects.

Those who support the reform say that the changes would allow for smoother legislative process and a reduction in the cost of politics as well as avoiding potential anomalies such as two different parties winning a majority in each chamber, leading to a stalled parliament.

Those who oppose it say the reform endangers the democratic balance of powers, giving too much power to the government over parliament, particularly considering the new electoral reform, which gives the party winning 37% of the votes in a general election control over 54% of the seats in the lower house of parliament.

Euro Zone
A poll of Italians revealed an overwhelming support for European Union and eurozone membership REUTERS

What does this have to do with the membership of the European Union?

Nothing at all. In fact, article 75 of the Italian constitution says that international treaties, among other matters, cannot be subject to legally-binding popular consultation.

Still, foreign investors and commentators are concerned about the result of the vote as they believe a political crisis in Italy following Renzi's defeat in the referendum may pave the way for government by the Five Star Movement and a potential European Union crisis. The president of the Institute for Political, Social and Economic studies EURISPES, Gian Maria Fara, told IBTimes UK this is a remote possibility because, even in the event of Renzi offering his resignations, there would not be a sufficiently united opposition front to govern Italy.

Also, while the Eurosceptic populist Five Star Movement has long been proposing an advisory referendum on the membership of the eurozone, a poll of 1,486 Italian people published on 21 November showed around two in three Italians support EU and eurozone membership.

Sara Lorenzon, a researcher at polling company Community Media Research, told IBTimes UK that Italians feel the EU and the single currency are a "necessity", although there is a strong voice that wants more involvement from the government in reforming European institutions. The possibility of a referendum on the membership like in the UK is remote, though, as 56.3% of respondents said that such a complex topic should be a matter for elected politicians to decide.