UK and European political risk is heightened post-Brexit. Uncertainty is also likely to remain elevated for some time as the path forward for the UK and the EU is unclear. Political implications for the European Union are likely to be far-reaching
With UK opting out of the union, Eastern and Central Europe, as well as Sweden, who are members of the EU (but not EMU) are going to lose an articulate advocate. Germany is going to lose an ally in resisting the statist approaches that France and Italy often propose.
Even with the UK, many defects may emerge. A majority of Scotland and Northern Ireland voted to remain part of the EU. EC President Juncker seemed so intent on punishing the UK that he was willing to antagonize Spain by suggesting Scotland deserves a hearing about staying in the EU.
UK's future Prime Minister, in particular, will have quite a burden to bear as he or she will have to trigger the article for leaving the EU. Concerns and fear are on the rise amongst London politicians, largely evident in the heated parliamentary debates. Even vociferous advocates of the Brexit now are less outspoken as they seem uncertain about what will, and may, happen now.
“The political contagion risks run high in the year ahead with Italy’s referendum on senate reforms Oct 2016, Dutch elections Mar 2017, French Apr-May 2017 and German Sep-Oct 2017 all carrying high risks of a strong rebuke by Eurosceptics,” said Richard Franulovich, Research Analyst at Westpac.
The material has been provided by InstaForex Company – www.instaforex.com