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.

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.

Hardening German attitudes on Greece risk a rupture

2015 ◽  
Keyword(s):  
Central Bank ◽  
Euro Area ◽  
Capital Controls ◽  
Financial Assistance ◽  
Content Type ◽  
Bank Deposits ◽  
Reform Programme ◽  
System Collapse ◽  
Greek Government ◽  
The Government

Significance Pressure is intensifying on the negotiators representing the Greek government and its creditors -- most importantly Germany -- to reach some form of agreement allowing the release of sufficient financial assistance for Greece to meet its payment obligations due by the end of June. However, the governing Greek coalition does not appear stable enough to adopt the reform programme demanded by its creditors. Meanwhile, German economic opinion on Greece is hardening, in the gathering belief that the risks to the rest of the euro-area from any concessions to Athens are now greater than those of a possible rupture. Impacts If the Greek negotiations drag on, the government may have to introduce capital controls to stem the outflow of bank deposits. Greece's central bank remains reliant on the ECB to continue authorising ELA, but opposition to ELA in Germany is growing. If the ECB withdrew ELA, Athens's choices would be to meet its creditors' demands, see a financial system collapse or exit the euro.

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.

Sudan's economic reform will prove challenging

2019 ◽  
Keyword(s):  
Economic Reform ◽  
Foreign Investment ◽  
International Aid ◽  
Economic Hardship ◽  
Debt Relief ◽  
Major Focus ◽  
Content Type ◽  
Government Corruption ◽  
The Us ◽  
The Government

Significance Bringing tangible improvements to the economy will be a major challenge for Sudan’s new transitional government. Economic hardship and anger over perceived government corruption were recurring causes of protests over recent years and could be again. Impacts The government will publicise its efforts to stabilise prices, although actually achieving this may prove elusive. Efforts to secure removal from the US list of state sponsors of terrorism will be a major focus, but this process will take time. Delisting would be welcomed by businesses and investors, and would boost debt relief prospects, but will not resolve underlying challenges. Significant new foreign investment will depend on the government’s performance, but fresh injections of international aid can be expected.

Croatia will remain under pressure until 2020 election

2019 ◽  
Keyword(s):  
Public Sector ◽  
Trade Unions ◽  
Retirement Age ◽  
Content Type ◽  
Public Finances ◽  
The Government ◽  
Council Presidency ◽  
The Eu ◽  
Public Sector Workers ◽  
At Home

Significance The government has capitulated to demands by trade unions to lower the retirement age despite a growing demographic imbalance and public finances under strain. In the process, the government has demonstrated its weakness and unpopularity. Impacts Surrender to the unions will encourage discontented public sector workers to seek pay rises, with teachers threatening strike action. Popular discontent with fiscal cutbacks will pose a risk to plans for Croatia to adopt the euro early next decade. Divisions at home will limit Croatia’s ability to push its political priorities when it assumes the EU Council presidency in January 2020.

EU moves will not stop Turkey prospecting off Cyprus

2019 ◽  
Keyword(s):  
Gas Pipeline ◽  
Content Type ◽  
Greek Government ◽  
High Level ◽  
Funding Cuts ◽  
The Eu

Significance Mitsotakis has chosen Cyprus for his first trip abroad two weeks after the EU announced sanctions against Turkey over prospecting operations in disputed parts of the seabed off Cyprus, divided between Greeks and Turks since 1974. They include suspension of high-level diplomatic contact, some funding cuts and a halt to talks on regional flight regulation. Impacts The risk of a Turkish-Greek naval confrontation is growing. The new Greek government will take a harsher line than its predecessor. Israel and Greece will press for a trans-Mediterranean gas pipeline with US support.

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.

Germany to wait out major EU decisions until post-2017

2015 ◽  
Keyword(s):  
Euro Area ◽  
Debt Relief ◽  
French Elections ◽  
Content Type ◽  
Greek Crisis ◽  
Eu Referendum ◽  
The Uk ◽  
Party Family ◽  
The Imf

Significance The Greek crisis has exposed Germany's euro-area dominance more clearly than ever -- to both Germany's partners and Germany, and to the discomfort of both. Merkel's decisions in the crisis have reflected in part her wish to buy time until after the 2017 German and French elections, and her belief in the continuing importance of the Franco-German relationship. Impacts Belying German hopes the three-year Greek deal will buy time until after 2017, October could see a new clash over debt relief and the IMF. Given the alternatives in Paris, Merkel will hope more strongly than usual for a new French president from her own party family. Waiting for stronger leadership in Paris could risk fuelling French eurosceptics' charges that France lacks influence. Seeing major 'future EU' initiatives only after the 2017 German and French polls, Berlin would like the UK EU referendum also over by then. Germany's wish to postpone major EU reforms will limit the scope of any pre-referendum deal with London.

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.

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