A publication that seeks to predict “the future course of the international system” suggests Prime Minister David Cameron’s European Union (EU) negotiations will fail to win the EU referendum, citing fallout from an imminent financial crisis centred on the Italian banking system as the reason why.

Writing for Geopolitical Futures, American political scientist George Friedman draws his readers’ attention to the idea that an Italian banking crisis forecast for 2016 “is coming to a head” spelling “trouble not just for Europe’s fourth largest economy, but also for the European Union and an already sputtering global economy.”

The issue to which Mr. Friedman points is non-performing loans (NPLs) held by many Italian banks, and the mounting trouble they are causing as concern over NPLs shifts to Italy’s largest banking institutions.

According to the European Banking Authority, approximately 17 per cent of all Italian loans are non-performing (some estimates are as high as 21 per cent) but for one bank, Monte dei Paschi, it is closer to 22 per cent. That bank holds about €45 billion of NPLs and doubtful loans.

Geopolitical Futures warns that unless the NPL problem, which is not unique to Monte dei Paschi, is addressed, a repetition of “the Greece disaster on a much larger scale” is on the cards.

As Reuters has begun to report on the issue, Mr. Friedman says “it is significant that the severity of Italy’s financial problems has been picked up by the mainstream press because what the conventional wisdom says matters.” He continues:

…markets are not about reality but about perceptions of reality. When Reuters says that a new market storm may be coming, they have changed the definition of reality. What has been a preposterous marginal view becomes the mainstream view. And people act on the mainstream view, particularly funds investing other people’s money, whose primary goal is to not look abysmally stupid. Doing what everyone else does may be stupid but not abysmally. Therefore, a spate of articles by Reuters could trigger what we have thought is coming.

It is at this point that Mr. Freidman’s analysis becomes truly apocalyptic in its predictions:

We have been focused on the non-performing loan (NPL) issue in Italy, and less on Spain or Portugal. But it followed that a banking crisis would hit sovereign debt markets. A reasonable case can be made that sometime at the end of one of the coming quarters, Italian (and maybe Spanish and Portuguese) NPLs could trigger a massive crisis in Europe. If this happens before the referendum in June, and I suspect it will at least become an obviously rising tsunami by then, the entire vote turns away from the issues I have raised here, and away from the issues Cameron has negotiated. The referendum will be about how the British lifeboat stays afloat in the chaos of Europe.

Others predict similar outcomes but on a different timescale, warning that such a crisis would be “a depression causing event” bringing in the EU’s richer nations.

In those circumstances it is to be hoped that the British lifeboat is launched after this June’s EU referendum, rather than remaining to wait for the European banking collapse.