Economic Overview – March 2017
The rise of populism in politics is not a new theme and has been gradually building in the years since the 2008 Global Financial Crisis, but exploded in 2016 with the UK referendum on Brexit and the U.S. Presidential election. Financial markets withstood the shock from Brexit because the Bank of England moved quickly to ease monetary policy, while in the case of the U.S. election it was the prospect of fiscal policy easing and deregulation that spurred risk markets higher. In both cases, the rise of populism has increased uncertainty for financial markets. In 2017 the European political environment will be put to the test with elections to be held in the Netherlands, France and Germany while the situation in Italy is fluid and could result in an early election. For financial markets and investors each of these poses an event risk.
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