The centre-left former mayor of Florence celebrated 1,000 days in office earlier this month by boasting that his time in charge had delivered respectable growth (1.6 percent), a recovery in household spending (up three percent), lower unemployment (down by one percent, employment up) and healthier public finances (budget deficit lowered by 0.4 percentage points).

Renzi's figures add up, economists say. But Antonio Medugno measures the country's economic performance by different data.

“I'm 36. I work full time and employ two other people. But still I have no choice but to live with my parents,” the Naples-based electrician tells AFP.

“My father is 63. He works as a janitor in a school and earns 950 euros ($1,000) a month – after a lifetime of work. How can people get by on such miserable salaries?”

And therein may lie the explanation as to why many fed-up Italians will vote No on Sunday in a referendum that is ostensibly on proposals to reform the country's parliamentary system, but could also usher the hitherto popular young premier towards the exit.

After seizing power in an internal party coup, Renzi has overseen a slow but steady recovery following years of stagnation and recession.

Industry leaders have welcomed what they see as his significant shake-up of the labour market and support Renzi's broader reform agenda, particularly his plans to overhaul a snail-paced judicial system seen as a major obstacle to investment.

Squeezed middle

The 41-year-old's problem is that the modest improvement seen to date and the promise of more to come has not been enough to make a real difference to Italy's “squeezed middle”.

Millions of ordinary families have endured years of declining real incomes and, as in other parts of the Western world, a realization is dawning on many young people that life will be tougher, in some ways, than it was for their parents.

Two thirds of Italians aged 18-34 are still living at home, owning or even renting their own place a distant dream as the low interest environment underpins property prices, to the benefit of the older generation.

The fundamental problem is not that growth is anaemic now, but that it has been for a decade and more, says Pietro Reichlin, an economics professor at Rome's Luiss university.

Underlying that, he argues, is a problem of competitiveness in a manufacturing and export-driven economy.

Where they have an edge – in food and drink, fashion and design, the luxury sector in general – Italian companies are growing strongly. But many others, notably in the important capital goods sector, are struggling. And since Italy joined the euro, at its launch 16 years ago, securing a competitive boost through devaluation is no longer an option.

“These are problems that were never going to be resolved in one parliament,” Reichlin said.

Raj Badiani, of business intelligence group IHS Markit, concurs. “Since the entry into the euro, Italy has not been fast enough to shift from its competitive devaluation model to a model based on productivity gains and higher value added production and services,” he said.

Bank failures feared

“Renzi understood this challenge and his reform dash was trying to accelerate the painfully slow transition process.”

Recovery has also been constrained by the reluctance of banks to lend, against a backdrop of a bad loans crisis that has also loomed large in the referendum debate.

Alberto Baban, of employers' organization Confindustria, says many small and medium-sized companies (SMEs) with good fundamentals are being hampered by “an ever worsening credit crunch.”

Economist Badiani said Renzi erred in not using state funds to recapitalize the stricken banks while he still could: before European rules on such schemes changed at the start of this year.

“Growth resumed in early 2015 but the investment cycle has failed to take off,” Badiani said.

Paradoxically, the crisis in the banking sector could prove to be Renzi's salvation on Sunday.

The last published opinion polls gave the No camp a significant lead, but pointed to between a quarter and a third of voters being undecided.

Some analysts think mounting speculation about post-vote market turbulence pushing the weakest banks into failure and igniting a much wider crisis may bring many of these fence-sitters into the Yes camp.

And even if Renzi is forced to step down, one of his friends in the business world, luxury fashion tycoon Brunello Cucinelli, does not expect him to give up on his mission to modernize Italy.

“I don't think anything serious will happen if the No wins,” Cucinelli told AFP. “I don't think he will abandon politics completely. He is someone we can count on to bring Italy into the modern era.”

By Olivier Baube and Angus MacKinnon