The eurozone economy is making a steady recovery across the board. However, a broader perspective on the recovery reveals that divergences have widened between the major euro countries: between France and Germany on the one hand and between Italy and Spain on the other.
Theresa May's decision to call snap elections to consolidate the Conservative Party's majority on the eve of negotiations with the European Union has backfired.
On 29 March 2017, the British Prime Minister, Theresa May, formally triggered article 50 to leave the European Union (EU), opening up a two-year mediation period, which could be extended to three years if the 27 EU members unanimously decide to prolong negotiations.
Emmanuel Macron is the eighth President of the Fifth Republic. The victory comes as a relief for the European markets and is favorable to EMU equities, as the political risk premium can continue to ease and unlock the upward potential of the asset class.
Motivated by a lack of conviction on the UK, holds an underweight stance on Europe ex-EMU equities. The uncertainties of Brexit conditions and their impact on the economy are keeping us away from the region. While most of the exchange rate adjustment process might be behind us, we expect earnings-growth expectations to soften somewhat once the negotiation talks start in earnest.
Over the past 10 years, since the onset of the Great Recession, the state of public finances among eurozone members has deteriorated considerably. The difficult bailout of Greece, and particularly the ECB intervention in summer 2012, prevented the breakup of the eurozone and restored calm to the sovereign bonds market.