We don’t know whether 2017 will bring surprises as formidable as those in the year now drawing to a close. Here in Europe, there is the threat of two risks that are each bigger than the Brexit ever was. The first would be an electoral victory by Marine Le Pen in France. At the least, that would put France’s membership in the European Union into question. The other major risk comes from a renewed euro crisis whose contours are already visible in Italy, Greece and Portugal.
A relatively innocuous Italian referendum over constitutional reform culminated in a political crisis. The solution looks like this: A new prime minister has been appointed; otherwise nothing has changed. There is no need to take note of his name; in a few months, Paolo Gentiloni will have disappeared in the swamp of Italian politics. What remains is a country that simply hasn’t come to terms with the euro. Since 1999, Italy has had virtually no economic growth; with Matteo Renzi, the last reformer has thrown in the towel.
There will be an attempt to postpone the inevitable, but no tricks by the central bank are of use against citizens’ indignation. At the same time, all the opposition parties are in favor of leaving the euro zone. At some point, they will form the government.