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“And that just feeds Salvini,’’ said Charles Grant, director of the Centre for European Reform, referring to Matteo Salvini, the Italian far-right populist who is a sharp critic of immigration, globalization and the European Union itself.
Matters will get worse with the economic impact of the crisis, Mr. Grant said. “The euro crisis could return, because there are too many bad debts in banks,’’ especially in Italy, “and there is still no proper bank resolution regime and no eurozone deposit insurance.’’
The populists, he said, “will make hay with that.’’
 

“It would be very hard for the Northern Europeans to say no and be too ‘Hanseatic’ about this given the difficulties that Italy is in, and the fragility of the Italian government,” said Charles Grant from the Centre for European Reform. “The EU thinks that this is the least bad government that is possible today in Italy and they don’t want it to collapse,” he said.

As Sam Lowe, senior research fellow at the Centre for European Reform, has pointed out, the UK accepts that leaving the EU’s single market and customs union means more autonomy but also more barriers to trade. There is none of the cognitive dissonance of the early May era, when the UK wanted to “have its cake and eat it.” “Beyond the headline issues the two parties aren’t so far apart,” Lowe said.

Sam Lowe of the Centre for European Reform said: “A deal by the end of the year is still possible but it will require both parties to drift away from their opening positions. “In practice, it requires the UK to move a lot and the EU to move a little.” 

"2016 was in some ways a missed opportunity," says Luigi Scazzieri from the Centre for European Reform, based in Brussels. "After the agreement, steps were not taken to make the relationship sustainable over time. There was then not much effort made to stop the cause of these problems - the war in Syria."