FXStreet (Delhi) – Research Team at Deutsche Bank, suggests that the environment for European policymakers has become even more challenging following the terrorist attacks in France in mid-November.
Key Quotes
“Politics has started to move. Fuelled by the threat of terrorist attacks, a more coherent response to the refugee crisis should be felt in different policy areas. Foreign and security policy will become more extensive including a stronger control of the EU’s external borders and most likely a more conservative European response to the refugee crisis. In terms of fiscal monitoring, the fiscal framework in the euro area provides sufficient flexibility (to a reasonable extent) should higher public spending related to foreign and security or asylum policy drive budget deficits beyond the agreed trajectory up. The European Commission intends to provide a thorough assessment of member state budget plans in Q1/ 2016.”
“EU-28 relations with Russia might be reviewed as Russia is seen as an important partner in coping with the tensions in the Middle East and by extension the refugee crisis and the threat of terrorism. A number of the sanctions imposed in 2014 have been linked to a successful implementation of the Minsk 2 agreement by the end of this year. The overall political environment — if not again deteriorating after the most recent events in Turkey and Ukraine — might work towards a re-assessment of parts of the sanctions over the course of 2016.”
“The Netherlands will assume the EU Council Presidency in the first half of 2016. One major topic will be re-negotiating the terms of British EU-membership.”
(Market News Provided by FXstreet)