This could be very scary because if Katla erupts, we’re talking an eruption on the scale of Mt. Pinatubo in terms of volcanic ash output—probably even more. Not only would it interrupt air travel in all of Europe, but it would cause substantial cooling of the Northern Hemisphere, which means more severe winters (e.g., California could experience another winter of way over average precipitation and Europe could get really snowed in).
Certainly has that capability, however inflation in the area is not all that indicative of a major massing of magma. However things are certainly extremely active in Iceland these past few years and it does warrant an eye.
Katla ramping up the tremor works again!
http://en.vedur.is/earthquakes-and-volcanism/earthquakes/myrdalsjokull