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BRUISED
BUT NOT
BROKEN
The European Union remains intact for at least another 5 years
Kristian Karppi, Managing Director, K&K Global Consulting Ltd
FINALISED 27th June 2017
Similar to the Arab spring in the early 2010s, there was a democratic move towards a reform of the Western world by strong conservative, anti-establishment sentiments since 2015 and it now seem to have culminated for at least another 5 years. In many instances within Europe, the sentiment highlighted public discontent with the European Union for the same reasons the U.S. population voted against a further presidential rule by the Democratic party. National protectionism, retaining welfare within the countries and pro-immigration controls were on the rise.
TIMELINE OF ELECTIONS
2018
• Italy - expected February 2018 - no later than 20 May 2018
Due to the large amount of retail savings within debt, this election may cause short term ripple effects in the fixed income markets if the Eurosceptic Five Star Movement wins. However, it is by no means the end of the Italian membership within the European Union as a) such membership decision would have to be elected through a referendum, b) pass a maze of bureaucracy and c) while the Five Star Movement is popular, it does not mean that the majority of Italians would want to break their membership with the European Union.
• Sweden – 9th September 2018
Mattias Karlsson, right-wing “Swedish Democrats” is challenging the establishment in the next government election.
2017
• United Kingdom – 8th June 2017
Prime Minister Theresa May took a leap of faith announcing an election on the 8th June 2017 in the hope of gaining a majority position to push through the Conservative party's Article 50 negotiation programme with a hard Brexit. Whilst losing seats, PM May still gained a majority and negotiated an alliance with the Democratic Unionist Party (DUP) to a Conservative government. K&KGC expects the European Union may be bruised but not broken with the UK being the only major economy within the European Union opting to leave. If the London buy-side are correct in their earlier predictions in 2016, the UK capital markets may face short term volatility over the next years. Something most long only firms should already have hedged for.
• France – 7th May 2017
Emmanuel Macron's historical landmark win in the general election against Marine Le Pen saved the European Union and it's common Euro currency for at least the next 5 years. President-elect Macron is focused on preserving a strong EU consensus and adherence. Macron is expected to become a tough negotiator against Great Britain in the Article 50 negotiations defending EU's interests.
• Germany – election date 24th September 2017
The wave of anti-immigration sentiment seems to be quelled and Angela Merkel, Chancellor of Germany, is expected to be challenged but mainly by mainstream parties.
• Czech Republic – 20th - 21st October 2017
Andrej Babiš of the 2nd largest centrist party “ANO 2011” is challenging the establishment for a second time.
2016
• Hungary – PM Victor Orban rolled out a referendum to reject EU migrant quotas on the 2nd October 2016. 98% out of 40.4% of voters opposed the EU quotas.
• United Kingdom - 23rd June 2016 - the British referendum:
• 51.89% leave vs. 48.11% remain.
• The trigger of Article 50 scheduled for the end of March 2017.
• 3rd November 2016 – The High Court ruled that the government cannot trigger Article 50 without a parliamentary vote.
• 21st November 2016 - European leaders reportedly came to a 27-nation consensus that the UK must be forced into a hard Brexit in order to counter the rise of populist movements which could break up the European Union.
• U.S.A. – 8th November 2016 - the election of Donald Trump as president-elect:
• 22 October 2016 - Trump announced a 100-day plan to dismantle government corruption and a requirement to eliminate two regulations for every new federal regulation.
• The result saw stock markets rise and bond markets fall based on promises of eased capital market regulations and cuts in public spending.
• President Donald Trump (took office on 20th January 2017) was perceived as the most Putin friendly of the two candidates in the election but less liberal in outsourcing business to China and Mexico.
• Italy - 4th December 2016 - the Italian referendum about the constitutional amendment.
a. PM Matteo Renzi resigned as the Italian referendum results showed a heavy support for the “no” vote as 68% of the Italian population participated in the election. There could be an election as soon as mid-2017, as many in the Democratic Party pushed for an early vote.
b. The progress of the challenging Eurosceptic Five Star Movement was slowed down by the appointment of the new PM Paolo Gentiloni. Some politicians called for a re-election in September 2017 as Gentiloni was not elected.
2015
• United Kingdom - 7th May 2015
Conservative David Cameron won the British elections by 36.9% with the promise of an EU referendum in order to prevent further support for the right-wing Eurosceptic UK
Independence Party lead by Nigel Farage.
• Denmark - 18th June 2015
Kristian Thulesen Dahl of the right-wing Danish People's Party became the second-largest party in parliament with 21.1% of the vote after a turnout by 85.8% of the voting population.
• Switzerland – 18th October 2015
Right-wing Swiss People's Party won the federal elections by 29.4%.
• Poland –25th October 2015.
The right-wing Law and Justice (Prawo i Sprawiedliwość, PiS) won 37.6% of the vote in the parliament election.
• It made its own appointments to the court, arguing that the previous appointments of the five judges by the Civil Platform were unconstitutional.
• The new administration also forcibly removed political opponents from a NATO-affiliated
military intelligence centre and the country's stock exchange, alongside other agencies.
• January 2016 – the government signed a law that came into force on 1st July to take control of
publicly funded media channels as well as public service directors. 160 journalists had either been
fired or resigned as of 18th July 2016 and the move was highly criticised by other EU member states.