CITI: Italian Referendum Bigger Risk to Europe Than Brexit


Analysts at Citi have called a probable Italian referendum on constitutional reform next fall “the single biggest risk on the European political landscape this year,” bigger even than Brexit.

In the midst of much hand-wringing over the possible consequences of the recent UK decision to detach itself from the European Union, Citi is saying that more serious dangers loom large on the horizon; namely upcoming referendums in Hungary and Italy.

In a memo titled “Global Economics View: Who’s Next? EU Political Risks After the Brexit Vote,” Tina Fordham, Citi’s chief global political analyst, informed clients that Italy’s referendum poses a higher risk for EU stability than the Brexit vote.

“Hungary (on EU refugee quotas) and Italy (on constitutional reform) will likely have referendums in H2 2016. The latter is probably the single biggest risk on the European political landscape this year among non-UK issues, as PM [Matteo] Renzi’s political future may be tied to the outcome of the referendum,” the memo reads.

Citi said that despite rising Euroscepticism across many countries, it does not expect any other In/Out referendums in an EU country in the near-term. In most EU countries electorates do not have the power to directly trigger EU referendums and those with the power to do so (usually Parliaments) “appear unlikely to use it,” Citi said, although “in an environment of diminishing trust in elites, the temptation to seek political legitimacy through referendums is tempting.”

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