During the Napoleonic and Revolutionary wars King Ferdinand of the Kingdom of the Two Scillies and his heir Francis are captured and die in some way. The King appointed by Napoleon, Joachim Murat, defects to the allies as OTL and England decides to allow him to keep the throne and hand over the occupied island of Sicily in exchange for certain promises and conditions. There is strong opposition to this, many wanting the throne to pass down Ferdinand's line but this was the decision made.
Through pressure of the Carbonari-led rebellion in 1821 he reforms the Kingdom into a Constitutional Parliamentary Democratic Monarchy. The Holy League rejects this and demand changes where upon Murat stands strong and rejects the pressure. In doing so a rift develops between the Kingdom and the Catholic Church. This leads to further reforms to break the dominance of the Church in the Kingdom. It also redeems Murat in the eyes of many Nationalists.
His son takes over an proves to be an intelligent business manager and directs royal resources to modernisation efforts including railroads and city improvements including a Secular Education initiative, strongly popular in the Northern Italian cities which looked on shocked and impressed at the Southern Kingdom’s actions, but steps up the anger of the Catholic Church.
This King dies the year before the 1848 revolutions and is succeeded by his brother. The Neapolitan Constitution is held up as an example of where ideas can be taken. However, many made suggestions for improvements even here. The king, sensing the desire to thumb his nose at the Pope and wrestle power away from the Church and large aristocratic families agrees to several reforms. These include standardising local democratic government, centralising power in Naples and increasing the power of the Parliament, and broadening the franchise.
Advocates of Italian unification are divided over whether to support Sardinia-Piedmont or the Two Scillies as the chief state to base unification on. This problem solves itself when the heir to Two Scillies, a tall handsome and respectable prince, marries the Second in line to the Sardinia-Piedmont throne, a charming glamorous Princess. Then the heir to Sardinia-Piedmont dies and agreement is reached to unite the two Kingdoms and to impose Scilly’s liberal Constitution North. This freaks out France and Austria.
The new State is formally called the "Kingdom of Sardinia-Piedmont and the Two Scillies". Though it is increasingly just referred to as "Italy". The capital is at Naples. The message from the South is slight concern at been pushed aside by the economically strong North. However, the new young King is very keen to improve, as he sees it, "his people". This includes extensive agricultural reforms and industrialisation. However, he can't prevent the movement of people out of the region to a certain extent. But they don't go to America. They instead head North to Piedmont, South to France's North Africa and other parts of Italy.
In order to reduce unemployment the state begins to hire more people to the army and reform it along more modern lines. Prussia decides to help improve the military of the state too, seeing it as a potential ally. The new State agrees to ally itself to Prussia because of fear of France and Austria. When Prussia and Austria Hungary go to war, the Italian State also declares war. France jumps in making it a two on two major power war.
Naples decides to use the war to attack and destroy the Papal States and formally declares itself "the Kingdom of Italy". The Pope doesn't really like this (understatement of the Century). Austria-Hungary gets owned. Lombardy-Venetia is annexed. The Italian speaking area of Tyrol is also annexed. France is also defeated and don't gain any areas of Piedmont. Corsica is annexed, birthplace of Napoleon. A huge blow.
Italy is now tied into the alliance system strongly bound to the new Empire of Germany. The South of Italy by this point is highly integrated and has fully bought into the notion of "Italianess". There is a massive crackdown on corruption and a promotion of civic duty. The focus on investments and economic development across the country, but specifically in the South continue to the turn of the century.