Italian instability could lead to more problems for Europe

Zombie-banks, anti-EU sentiment and a stagnant economy are just some of the issues facing a country that would be too big to bail out, writes Philippe Legrain

Political instability in Italy is nothing new. But Italian voters’ rejection of constitutional reforms in a referendum has not only led prime minister Matteo Renzi to resign; it has dealt another blow to a crisis-ridden European Union.

In the near term, Italy’s ongoing banking crisis could flare up again and threaten European stability; in the longer term, Italy may have to leave the eurozone, which would put the single currency itself at risk.