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Spain: Elections likely to deliver an unprecedentedly fragmented Parliament – Deutsche Bank

Discussion in 'Fundamental Analysis' started by FXStreet_Team, Dec 11, 2015.

  1. FXStreet_Team

    FXStreet_Team Well-Known Member Trader

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    FXStreet (Delhi) – Marco Stringa, European Economist at Deutsche Bank, suggests that the 20 December general election in Spain is likely to deliver an unprecedentedly fragmented Parliament.

    Key Quotes

    “Political risk at national level has decreased over the past few months. Political risk in Spain could materialise from three directions. First, a government heavily influenced by Podemos could lead to a reversal of recent structural reforms. But based on opinion polls, Podemos' chances of driving the policies of the next government have fallen sharply.”

    “Second, a fragmented parliament could lead to a political impasse. This risk has also decreased. With the recent surge in the vote intentions for pro-business Citizens, a centre-right coalition could have an absolute majority. That said, Marco believes that Citizens will not enter into a formal government coalition but rather provide only external support.”

    “Third, the situation in Catalonia remains unresolved. Marco continues to see a compromise centered on an overhaul of regional financing as the most reasonable outcome. But PP and Citizens are strongly pro national unity, hence reaching a compromise with the pro-independence parties will not be easy and a negative outcome cannot be excluded. Overall GDP growth is bound to slow down, but the Spanish economy should continue to materially outperform the euro-area average in both 2016 and 2017.‎”
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