Macroscope | Never mind Brexit, political chaos in Italy could be the fatal blow for European unity

You could have been forgiven for thinking Europe was a trouble-free haven of stability. After all, investors have flooded into its capital markets chasing a glut of super-stimulus from the European Central Bank, economic recovery has flourished and political problems seemed a thing of the past. Even Greece has been welcomed back into the global lending club. European unity has never seemed better. 

Little has changed. The problems keep piling up and Europe is wading into troubled waters again. Bulled-up stock market investors are having doubts about the durability of Europe's recovery once the ECB winds down its stimulus programme. There is even growing talk about a future hard landing once the ECB’s gravy train grinds to a halt. Economic confidence is already taking a dive with euro-zone consumers and businesses fretting about life after zero interest rates and quantitative easing. 

Policy differences are already beginning to rankle. European unity has been a shining beacon in the past couple of years as the European Union has closed ranks against Britain’s Brexit plans. In reality though, European unity is a chimera. Once Brexit hostilities move backstage, there are deeper problems waiting in the wings, rekindling a return to the bad old days of European uncertainty, political backbiting and discord.