Europe: Politics remain in the limelight – BBH

Research Team at BBH, suggests that the news over the weekend from Europe is primarily political in nature as Sarkozy is going to retire (again) after taking a drubbing in the Republican Party primary in France.

Key Quotes

“Fillon, the self-styled French Thatcher, unexpectedly beat Juppe.  But without 50% of the vote, the results set up a run-off this coming weekend.  It is as if, knowing their candidate will likely face Le Pen in the final round next spring, the Republican Party might as well chose the most extreme laissez-faire candidate.  The so far uninspiring center-right Republicans will have to depend on the left's antipathy toward the populist right to overcome the National Front's challenge.”  

“In Germany, Merkel officially announced her candidacy for a fourth term as German Chancellor.  This was widely expected.  Merkel has moved to protect her flanks after her immigration policy caused a fissure in her alliance with Bavaria's CSU.  The national election is planned for next fall.  The anti-immigration and anti-EU AfD party have come on strong to win representation in all but a few German states.  The most likely outcome is for a continuation of a grand coalition between the CDU and SPD.  It is possible that another party is needed to form a coalition government.  If so, the FDP are more likely than the Greens.”

“In the UK, Chancellor of the Exchequer Hammond played down need to provide strong fiscal stimulus in this week's Autumn Statement.  Separately, Prime Minister May's op-ed piece in the Financial Times marks out a pro-business stance, including a corporate tax cut that will lower the UK rate to the lowest in the G20.”