A new Italian centre-right government could be weak

2018 ◽  
Keyword(s):  
Financial Markets ◽  
Euro Area ◽  
Democratic Party ◽  
Critical Level ◽  
Grand Coalition ◽  
Content Type ◽  
The Eu

Significance The last month has seen two important developments. First, polls suggest the combined vote for the centre-right is approaching the critical level needed for a majority. Second, both centre-right Forza Italia and the centre-left Democratic Party (PD) have ruled out a grand coalition. Both prefer a second election if no coalition wins a majority. Impacts Even if no bloc wins a majority, President Sergio Mattarella will try to resist a second election. Forza Italia and the PD might renege on their campaign pledges and form a grand coalition if no bloc wins a majority. As long as Forza Italia remains the largest party in the centre-right bloc, a referendum on euro-area membership is unlikely. A Eurosceptic alliance between the League and the M5S would unsettle the EU and financial markets.

Referendum sets Greece at odds with lenders

2015 ◽  
Keyword(s):  
Financial Markets ◽  
Euro Area ◽  
Commercial Banks ◽  
Capital Controls ◽  
Breaking Point ◽  
Coalition Government ◽  
Structural Reforms ◽  
Content Type ◽  
European Trade ◽  
The Eu

Significance The decision of the Syriza-led coalition government to call a referendum on the proposals from the Eurogroup of euro-area finance ministers for structural reforms to support further aid transfers precipitated a run on commercial banks, causing them to be closed for six working days, along with the imposition of capital controls. Greece's bailout programme, already extended by four months, expires tomorrow. Financial markets fell in morning European trade as hopes of a last-minute compromise were seen to have diminished. Impacts Capital controls could be extended for months causing existing businesses operational difficulties and disrupting investment in new ones. Recession would postpone the return to growth essential for Greece to begin paying down its mountainous debt (about 180% of GDP). The referendum stretches relations with the euro-area to near breaking-point but there is no mechanism for leaving without leaving the EU.

Italy’s EP elections may worsen populist relations

2019 ◽  
Keyword(s):  
Policy Making ◽  
Democratic Party ◽  
Grand Coalition ◽  
Policy Support ◽  
Content Type ◽  
Eu Integration ◽  
Five Star Movement ◽  
Italian Politics ◽  
Election Results ◽  
The Eu

Subject Italy and EU elections. Significance The emergence of Italy’s Eurosceptic populist Five Star Movement (M5S) and League as the country’s two largest parties will transform Italy from being a strong and consistent supporter of EU integration to adopting a Eurosceptic and ‘nation first’ approach to policy-making. At the same time, given the predominance of the EU in domestic Italian politics, the European Parliament (EP) election results will represent a crucial barometer of support for the M5S and League, whose relationship in government is often characterised by discord. Impacts The losses suffered by Forza Italia and the Democratic Party will damage the centrist grand coalition and policy stability in Brussels. The rise of the League and M5S will weaken policy support for French and Spanish parties in the EP. Brussels will be under pressure from member states to force Rome into reconsidering some of its economic proposals.

The international strength of the euro will grow

2021 ◽  
Keyword(s):  
Euro Area ◽  
Financial Services ◽  
Raw Materials ◽  
Domestic Demand ◽  
Content Type ◽  
The Us ◽  
Us Dollar ◽  
Strategic Autonomy ◽  
Geopolitical Risks ◽  
The Eu

Significance The proposals identified areas where the euro could potentially become more dominant, such as the issuance of green bonds, digital currencies, and international trade in raw materials and energy. Ambitions to enhance the international leverage of the euro are being driven by the aim to strengthen EU strategic autonomy amid rising geopolitical risks. Impacts Developing its digital finance sector would be an opportunity for the EU to enhance its strategic autonomy in financial services. Challenging the US dollar would require the euro-area to rebalance its economy away from foreign to domestic demand. Member state division will prevent the economic reconfiguration the euro-area needed to make the euro a truly global currency.

EU bonds will rival German Bunds as a safe asset

2021 ◽  
Keyword(s):  
Euro Area ◽  
Safe Haven ◽  
Content Type ◽  
The World ◽  
The Creation ◽  
Over Time ◽  
The Eu

Significance This could create an alternative benchmark safe-haven asset to rival German Bunds within the region. As part of its issuance plans, the EU intends to issue at least EUR50bn in green bonds annually, which is likely to make it the world’s largest issuer of these bonds. Impacts The increased importance of EU bonds over time will help to support the euro's value and could eventually put pressure on the dollar. The EU is leading the world in green bond issuance, but the risk of spurious environmental claims (‘greenwashing’) must be managed. The creation of new EU bonds will help reduce the funding costs of riskier euro-area members such as Italy.

Slovenia will remain polarised, whatever Jansa’s fate

2021 ◽  
Keyword(s):  
United States ◽  
Democratic Party ◽  
Prime Minister ◽  
European Council ◽  
Content Type ◽  
The Government ◽  
Council Presidency ◽  
The Eu

Significance The government led by the Slovenian Democratic Party (SDS) is under mounting pressure as Slovenia prepares to take over the European Council presidency. This is due mainly to hostility in parliament and society to Prime Minister Janez Jansa, who promotes a popular but divisive form of national conservatism. Impacts A successful no-confidence vote in the government followed by early elections would complicate Slovenia’s handling of its EU presidency. The fall of the current government and its replacement by the centre-left would improve Slovenia’s relations with the EU and United States. Hungarian Prime Minister Viktor Orban would lose an ally at EU level if Jansa lost office.

Greece to seek end of austerity, not euro membership

2015 ◽  
Keyword(s):  
Public Sector ◽  
Euro Area ◽  
Economic Hardship ◽  
Debt Relief ◽  
Credible Commitments ◽  
Content Type ◽  
Political Constraints ◽  
Greek Government ◽  
Domestic Political Constraints ◽  
The Eu

Significance Greece's government and voters have delivered a punishing blow to euro-area policies. However, the underlying dilemmas remain unchanged: whether creditors will countenance debt relief, whether the Greek government can produce credible commitments on reform, and whether euro-area leaders can manage their domestic political constraints and divisions. Impacts Without European assistance, Greece faces a period of economic hardship as funds dry up to pay public-sector salaries and pensions. Without ECB liquidity injections to keep the banks operational, they will require recapitalisation. A bail-in of depositors is possible. Otherwise, a raft of bankruptcies is expected among businesses unable to acquire operational financing. The referendum result will encourage anti-austerity eurosceptics elsewhere in the EU.

EU's MiFID II still challenging despite delay

2016 ◽  
Keyword(s):  
Financial Markets ◽  
The United States ◽  
Market Reform ◽  
Technical Standards ◽  
Content Type ◽  
Recent Developments ◽  
The Postponement ◽  
Eu Financial Markets ◽  
The Eu ◽  
Financial Markets Regulation

Subject Recent developments in EU financial markets regulation. Significance EU authorities have conceded that the January 2017 deadline for implementing the revised Markets in Financial Instruments Directive (MiFID II) must be pushed back, probably for a year. The postponement underlines a gap within the EU between tough rhetoric on financial market reform and the institutional ability to translate it into practice. However, EU regulators have made clear that the MiFID II delay will not spill over to slow other reforms -- for example, by moving to resolve a long-running dispute with the United States over derivatives clearing. Impacts Firms' compliance challenges will be formidable and are as yet undefined. The scope of these challenges will depend on formal adoption of the final texts of pending technical standards. The MiFID II delay vindicates concerns expressed by ESMA, and will buttress its authority.

Four disintegration risks may threaten the EU’s future

2017 ◽  
Keyword(s):  
Euro Area ◽  
Presidential Election ◽  
The Political ◽  
Economic Downturn ◽  
Political Uncertainty ◽  
National Front ◽  
Content Type ◽  
Marine Le Pen ◽  
Decisive Victory ◽  
The Eu

Subject Four European disintegration risks. Significance After the French presidential election, which saw the decisive victory of Emmanuel Macron over National Front leader Marine Le Pen, a sigh of relief could be heard in European capitals: the worse had been avoided; the EU would thrive again. This relief could be premature. At least four disintegration risks are still threatening the EU. Impacts Even though its economic prospects are positive, the euro-area remains fragile and could plunge back into chaos if left unreformed. An economic downturn would benefit Eurosceptic populist parties. The political uncertainty of a caretaker government in Germany will increase its officials' reluctance to agree to any euro-area reforms.

German fiscal expansion is unlikely despite concerns

2019 ◽  
Keyword(s):  
Euro Area ◽  
Negative Effects ◽  
Content Type ◽  
Political Consequences ◽  
The Third ◽  
Defence Spending ◽  
Economic Outlook ◽  
The Eu

Significance The economy shrank by 0.1% quarter-on-quarter in April-June; further shrinking in the third quarter would mean a technical recession. Since growth is not likely to pick up much in the next two to three quarters, the economic outlook for Germany is gloomy, with potentially significant political consequences. Impacts Germany’s hard-line stance against ambitious euro-area reform is likely to become more entrenched. The implications of a German slowdown for the EU-26 will increase the chances of the ECB using unconventional policy to add stimulus. A recession is likely to have negative effects on Germany’s defence spending, despite US pressure on Berlin to contribute more towards NATO.

'Brexit' fallout could hit EU financial assets widely

2016 ◽  
Keyword(s):  
Financial Markets ◽  
Current Account Deficit ◽  
Financial Assets ◽  
Government Bonds ◽  
Content Type ◽  
Eu Membership ◽  
Run Up ◽  
High Yields ◽  
The Uk ◽  
The Eu

Subject The potential fallout from 'Brexit' on both UK and EU-wide financial assets. Significance In the run-up to the June 23 referendum on the United Kingdom's EU membership, the 'Brexit' risk has been weighing on UK confidence and investment. The reaction in financial markets has been more benign, with the pound rising by 3.6% against the dollar since end-February and a 54-basis-point (bp) year-to-date fall in the ten-year gilts yield. The absence of a 'Brexit premium' suggests investors may be underpricing both the UK-specific and EU-wide risks associated with a UK exit from the EU at a time of heightened market volatility. Impacts UK government bonds, along with their US equivalents, will remain attractive to investors because of their relatively high yields. Meanwhile, euro-area and Japanese bonds, whose yields are negative or slightly positive at best, will remain unattractive. The prolonged uncertainty during the post-referendum renegotiations could shave 1.0-1.5 pp off UK GDP growth by end-2017. The wide UK current account deficit and the country's reliance on foreign capital underscore the risks associated with Brexit.

Sign in / Sign up

Export Citation Format

Share Document