9th February 2017, GTC Advisors – Europe, Possible Tough Times Ahead

Press Release (ePRNews.com) - GENEVA, Switzerland - Feb 09, 2017 - As the European Union is on the verge of its 60th birthday next month, general elections being held in several key member states this year look to either stabilize the Eurozone or pull it apart.

2017 has been touted as the make or break year for the EU after last year’s Brexit looked to pave the way for more countries to look at a possible exit.

Next month the Netherlands holds its general elections. Despite a strong economy and unemployment close to an all-time low the country is like many others within the EU. Populist movements have taken over the continent over the last couple of years mainly due to the displaced immigrant crisis and the poor performing economies of some of its members, affecting the value of the Euro and causing the ECB to make huge stimulus promises.

It is unlikely that Holland will see any major changes within its current political sphere, yet there are still concerns about how much the populist movement will gain in what is one of the more liberal members of the EU.

More dangerous to the harmonious European Union is the current climate in France.

A staunch supporter of the union, one of its founding members, France is at the forefront of the immigrant crisis and this has given rise to Front National, a populist party lead by Ms. Le Pen. With scandals running through the current government it is hardly surprising that the voters are looking for another alternative. Quoting the Brexit of last year one of Ms. Le Pen’s key motions is to leave the Euro and look to emulate the UK and engineer their own Frexit.

The implications of this are huge. France’s predominantly socialist economy has felt the brunt of the falling Euro and unemployment in the country is running at close to 10% and its economy is fairing no better. Discontent among its public is becoming more vocal and many feel that should a new party take control major changes will have to be implemented.

In September, Germany goes to the polling stations and Angela Merkel is yet again looking to hold onto her seat of what is basically the largest and fiercest supporter of the European Union.

The manufacturing power house has continued to try and keep the European Union together whilst facing the same issues politically as its closet neighbors. Its current Christian Democrat Party has been at the helm for quite some time now and it is hard to see a major coup by any far right group, but stranger things have happened before and will happen again.

Merkel is the driving force behind keeping Europe together and it’s her belief that the EU’s economy can be turned around, however, the sheer size of the problems facing one of the largest economies globally keep on increasing and it is possible that the German public will look to a new start should, for instance, France go to the populists and look to remove themselves from the union.

Whilst elections will be the main news in Europe over the coming months there is also growing concern about the state of Greece’s finances. Just recently there has been discourse between the IMF and the European Central Bank regarding whether Greece’s current government has done enough to secure them their 3rd round of bailout funds, money that is needed by the government to make the next round of debt repayments in July.

With the IMF taking an unusually relaxed approach to the countries standing and suggesting that the EU look to ease more of the debt, the ECB and EU are at polar opposites and want Greece to make tighter reforms in an effort to support long term growth and stabilize government finances. Ultimately, the likelihood is that Greece will receive its next round of funding as its private and public sector creditors, all of whom are expecting repayments in July are also the sources of further funding in the future.

It’s not just Greece that is having issues. Italian banks are still reeling from the Monte Dei Paschi disgrace which saw the world’s oldest bank require major assistance to stop it from having to fold. The bank missed several funding deadlines and by the end of 2016 was basically at the governments door seeking assistance.

This has led many within Italy to call for leaving the Euro behind and again we see populist movements gaining popularity over the course of the year.

Europe has an important time ahead. The entire continent is watching to see what happens in France as their elections are at the beginning of the year and could be a precursor to what other members of the EU will look to follow.

If stability cannot be forged there is a massive chance that the Euro will decline further, past parity against the USD and after that, there will be more calls for exits from the European Union, further destabilizing the region.

On the plus side, the new administration in the US is ideally positioned to nurture new agreements and keep the global wheels of commerce flowing. We have already seen the US equity markets continue to hold and make gains across the board and this is a firm sign that investors are looking to the US as a safeguard against possible political upsets within the Eurozone.

GTC Advisors prides itself in offering a truly global financial service. Our ability to provide a wide range of independent financial advice incorporating multiple sectors, markets and demographics is key to retaining clients and nurturing new relationships.

Contact an advisor today for a free consultation at www.gtc-advisors.com

Source : GTC Advisors
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