CITI: 'The single biggest risk on the European political landscape' this year is not Brexit

The "single biggest risk on the European political landscape" is happening this year, and it is not Britain leaving the European Union, say analysts at Citi.

Tina Fordham and her team at Citi told clients in a note, entitled "Global Economics View: Who's Next? EU Political Risks After The Brexit Vote," that while Britons voting to leave the 28-nation bloc poses a problem for the EU, it is actually the high risk of Italy having its own referendum that poses a huge threat to the political landscape (emphasis ours):

"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.

"We do not expect any other In/Out referendums on EU/Eurozone membership in an EU country in the near-term, despite rising EU- and Euro-scepticism across many countries. The reasons are that electorates cannot directly trigger EU referendums in most countries and that the authorities (usually Parliaments) that have the power currently appear unlikely to use it although in an environment of diminishing trust in elites, the temptation to seek political legitimacy through referendums is tempting."

In October this year, Italians will have a say on reforms to its Senate, the upper house of parliament, in October.

If approved, the reforms could improve the stability of Italy's political set up and allow Renzi to push through laws aimed at improving the country's economic competitiveness.

If denied, Renzi's government will fall, plunging Italy back into the type of political chaos last seen after the ousting of former Prime Minister Silvio Berlusconi. And since the eurosceptic vote won in Britain, analysts are now worried that these reforms will not go through.

On June 23, 51.9% of Brits voted for a Brexit in the referendum on European Union membership versus 48.1% who voted for Britain to stay within the EU. The turnout was 72.2% of the 46,499,537 people who were entitled to take part in the vote. This is a record for a UK poll.

Analysts say that now, because the Leave vote was successful, this could lead to other countries across Europe holding their own referendums due to the rise of populism across many EU nations. Right-wing and anti-immigrant parties in France, Slovakia, the Netherlands, Denmark, and Sweden are asking for their own referendums.

Citi has a chart which shows how many countries across Europe have growing euroscepticism and which could pose a threat to the makeup of the EU: