Hello, my name is David Runsman and this is Talking Politics. We have an extra episode this week with Adam Tuz, and he is going to explain the wider European and global context for Britain's Brexit crisis.

We recorded this conversation about a week ago, so before the big vote in the House of Commons. This isn't about that, it is about the big picture. What is happening around the world?

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When we talked in the summer, we touched on a few of the kind of potential flashpoints, six months or whatever it is, quite a long time in political economy.

We did at the end, I think you and Helen both agreed that you saw Italy in the European context as the bit that was flashing red. So maybe we'll start with Italy and then work out all side ways from there.

So how do you see the Italian situation at the moment? How dangerous is it for the European project?

I think the Italian situation has changed shape since we last talked. All the way through to November, indeed early December, it looked as though we were set for a real showdown.

On the battleground of the budget itself and the capital markets. And then Rome pulled back from the brink, offered a compromise which the commission accepted. Both of those moves were significant.

And so I think in that sense the immediate crisis that we saw coming has been postponed.

I say post-post-post-post. I say post-post-post for two reasons. First of all, the warning lights on the Italian economy have been flashing red really for the last six months. So the denominator in the debt to GDP puzzle, the GDP element of that is on a retrograde.

Through the first half of 2018 it looked as though the Eurozone, including Italy, was actually picking up some steam. And then the Eurozone has a whole of slow down and nowhere more severely than in Italy.

Really bad numbers out of the Italian manufacturing sector. And ongoing problems in the banking sector. But then the other element of this which I think is even more important is the relative balance within the coalition.

So there are different ways in which this compromise could have been done. But I think they're really worrying sign. Both over the latest bank bailout of the big bank in Genoa and over the terms of the settlement with the commission are that the deal is basically being done on term set by the league, not by five star. And if you had to pick, you know, the best of a bad bunch.

From the point of view of the viability of the European project, what you don't want to be doing is handing victories to the league over five star because five star are the bit within that coalition, which you know a couple of years ago could still broadly have been classed as pro European and the league evidently not. But the bank bailout, the bank,

the bank, the bank, the bank, the bank, the bank, the bank, which is in the heartland of the league in the north. And the elements that were sacrificed in the budget deal were the elements that really were five star territory, and the league is going to get the tax cuts for small business that it wanted.

And then a longer run, of course, this, this bodes ill because if this coalition is reconfigured under the dominant sign of the league, that may give us a pro business agenda, a supply side reform agenda on which they might be able to agree with the commission and the IMF and God knows who.

But in terms of the broader politics of Europe, it's a disaster because come refugee crisis season next summer, we're going to be dealing with an even less cooperative Italian government.

Because we also have come the European elections, both parties in the Italian government are positioning themselves for that. And we've seen recently that one thing that Salvini has done, and he's made this pitch to the polls, that there's a kind of a new axis, which is, you know, bizarrely, the Italian Polish axis to set against the Franco German axis.

And in the wider European context, I mean, East West is too crude, but there is this sense that Italy is increasingly looking east. And that's the league. I mean, five star have also been sort of positioning themselves with populist parties, sort of Scandinavian populist parties, the sort of sort of more techno end.

But the Salvini pitch with the polls is shocking, you know, way.

And there was a position in between, which was with the Belusconi friendship with Putin. And even before that, Rome has always been very lukewarm on sanctions against Russia over Ukraine.

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