Italy is holding a referendum this weekend, and everyone is rushing to the dictionaries to see how you say "Brexit" in Italian.

This is an update from Jason Horowitz:

From Washington to Brussels to Berlin, fears are rising that Italy may be stumbling into its own "Brexit" moment. What should be an inward-looking referendum on whether to overhaul Italy's ossified political and electoral system has taken on much broader import. Financial analysts warn of a potential banking crisis, and pro-Europe supporters fear that a "no" vote in the referendum could accelerate the populist movement across the European bloc.

Italy is potentially the next domino to fall, partly because of the disillusionment of young voters. They have been swept up by many of the same forces that led peers in Spain and Greece to vote for upstart parties, the British to vote to leave the European Union, and Americans to elect Donald J. Trump. In France, President François Hollande announced on Thursday that he would not seek re-election — another establishment figure succumbing to the political moment.

Mr. Renzi's supporters have taken to calling his opponents in the internet-born, populist Five Star Movement "Trumpisti." They accuse their opponents' numerous blogs and websites of flooding the Facebook accounts of young people with anti-Renzi, pro-Russian fake news. The referendum has essentially become a referendum on Mr. Renzi, who gave extra motivation to his political enemies by vowing to resign if voters reject the proposed political changes.

"A 'no' vote is a vote against Renzi," said Matteo Roselli, 25, a liberal activist who spent a recent rainy evening in Turin handing out leaflets encouraging people to vote "no."

Maybe we need a movie called Divorce, Italian Style!   

In many ways, Italy has a bit of the European disease that is attacking the entire continent.  Taxes are high, regulations are rampant, and no one is having babies.

According to Heritage, Italy is #86 in the 2016 Index of Economic Freedom.  Not good, as we can see:

Sharp increases in public debt aggravated by institutional weaknesses undercut long-term competitiveness. 

Due to the burdensome regulatory environment, the informal sector still accounts for considerable economic activity, particularly in the South. 

Corruption, often involving government officials, continues to undermine public trust.

The informal sector accounts for considerable economic activity?  Corruption?  We've seen that movie before in Brazil, Mexico, and elsewhere.

Italy's problem is that leaving the European Union or more populism will not fix its structural problems.  In other words, Italy needs to scale back the size of government, cut taxes so that people can do business honestly, and stop crony capitalism.

I can understand the frustration with the EU.  On the other hand, Italy has a lot of homegrown problems that leaving the EU will not fix.

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