EU Elections: Understanding the risks and their implications for the EUR

Claire Dissaux, Mena Bassily | May 20, 2019

With the European Parliament elections taking place this week, Millennium Global’s Macro Economic and Research team are pleased to release a research note examining the risks and implications for the Euro.

In summary, we believe the short-term impact is likely to be benign although there may be a negative immediate effect on Euro sentiment, specifically, if a populist victory in Italy revives market concerns about unsustainable government debt dynamics. In addition, the outcome of the EP elections may affect the outlook for institutional reforms of the EU/EMU over the longer term and indirectly influence the choice of the next ECB governor this year. Both developments could potentially carry negative consequences for the Euro over the medium term especially if this were to weaken the ability of the ECB to react to the next global downturn.