Why the coronavirus could lead to another surge in Euroscepticism

Euroscepticism never actually went away after Brexit, but European Union stalwarts have largely been holding the line, with gambits from anti-EU leaders like Italy's Matteo Salvini failing over the past year. But the COVID-19 pandemic could change that.

Countries like Italy, Spain, and Portugal have seen their debt burdens rise during the pandemic, but despite calls from Italy for Brussels to issue so-called "eurobonds" to share debt more evenly across the continent, the European Central Bank is instead relying on a massive asset-purchase program which allows all eurozone members to borrow from bond markets during the downturn. But risk varies by country.

"What matters to markets is the sense that we are not seeing solidarity at a time of crisis," Mark Dowding, the chief investment officer at BlueBay Asset Management, told the Financial Times. "Instead it's every man for himself. That is going to fuel Euroscepticism, which eventually sees fears of a breakup getting priced in."

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Richard McGuire, a rates strategist at a Rabobank, concurred, telling FT the "creditworthiness of member states is back at the center of the market's radar." He added that the concern stretches across all of southern Europe. "We are moving back to a two-speed continent," he said. Read more at The Financial Times.