In Europe, the swing towards euro-sceptic and anti-fiscal austerity positions continues. In Spain, the outcome of the regional elections held on 24 May marked the end of the twoparty system, opening up highly uncertain political scenarios at the national level too. The result of the Spanish vote will on the one hand push towards more flexible positions in managing imbalances in Europe while hardening the case for a tough stance on Greece and protest parties’ requests….<\/p>\n
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Sign up for our free newsletter to receive weekly news from BONDWorld. Click here to register for your free copy<\/strong><\/span><\/a> <\/strong><\/span><\/a><\/span><\/p>\n Intesa Sanpaolo – Research Department For professional investors and advisers only<\/strong><\/p>\n Meanwhile, the chances of Greece reaching an agreement remain uncertain; technical negotiations have stalled, and the outcome of the talks is now tied to politics.<\/p>\n The regional elections in Spain, held on 24 May, introduced important changes to the political picture.<\/strong> The traditional parties, the PP and PSOE, suffered a significant loss in consensus, jointly winning just over 52% of the vote, as opposed to more than 65% in 2011. The PP confirmed its leadership on the Spanish political scene, but lost more than 10% of its voters, stopping at 27% of consensus. The PSOE suffered a three-point decline to 25%, and in many municipalities it failed to even make the grade as the second-largest political force. Podemos ranked as the third party and won in Barcelona, although it fell short of the result anticipated by pre-election polls. The newly born Ciudadanos movement also managed to secure seats in many municipal councils. The real winners of the elections, however, were uncertainty and political fragmentation. Of the 13 regions in which the vote was held, almost all will have to form coalition governments, and the process could take several weeks. Likely alliances, based on political positions, could be PP-Ciudadanos and PSOE-Podemos, but it cannot be taken for granted at present that the new movements will want to form alliances with the traditional parties, to which they intend to represent an alternative. The testing grounds will be Madrid and Barcelona, which will be governed by coalitions formed by the PSOE and Podemos. The ascent of the new political movements is understandable as a reaction to corruption and to the costs of austerity; however, it poses the risk of the reform process stalling at the national level and, paradoxically, of hindering government alternation. A simulation run by El País based on the outcome of the regional elections indicates that at the national elections at the end of 2015 the PP would win only 120 seats (vs. 132 in 2011), the PSOE 108 (from 119), Podemos 37, and Ciudadanos 18. Therefore, following the autumn elections, for the first time since 1978 the country could be governed by a large coalition, which risks being the only solution possible.<\/p>\n Negotiations between Greece the three institutions have stalled.<\/strong> Although the Greek front attempted to convey the message that a positive conclusion is within reach (which is indeed useful in reassuring depositors on the eve of the weekend), the statements made by international creditors show that positions have now crystallised, and that the negotiators have probably reached the limits imposed by their mandates. By admission of Tsakalotos, head of the Greek delegation, the situation could now only be unclogged by political moves: either Greece moves back its “red lines”, or creditors make further concessions on conditions.<\/p>\n However, the agreement will also have to include guarantees on the coverage of future financial requirements, otherwise the IMF could decide to disengage.<\/p>\n What is the margin left for negotiations? An IMF spokesperson has confirmed that Greece could request that the June tranches be grouped together in a single payment at the end of the month, wining a couple of weeks’ more time, but that it has still not done so. A few days will be necessary to ratify at the national levels the decisions taken by the Eurogroup, where required. However, we stress that not just any agreement will be enough to “solve” the problem. The solution lies in a multi-year process that will have to include fiscal discipline (i.e. adequate primary surpluses maintained for many years), a restructuring of EFSF debt, new financing to cover cash payments that cannot be re-financed on the market, and structural reforms to re-launch growth. An agreement would in any case mark only a first step towards a possible and uncertain solution, and the risk of a crisis would represent itself every time the process is subjected to controls.<\/p>\n Source: BONDWorld.ch<\/p>\n","protected":false},"excerpt":{"rendered":" In Europe, the swing towards euro-sceptic and anti-fiscal austerity positions continues. In Spain, the outcome of the regional elections held on 24 May marked the end of the twoparty system, opening up highly uncertain political scenarios at the national level too. The result of the Spanish vote will on the one hand push towards more […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"telegram_tosend":false,"telegram_tosend_message":"","telegram_tosend_target":0,"footnotes":"","_wpscp_schedule_draft_date":"","_wpscp_schedule_republish_date":"","_wpscppro_advance_schedule":false,"_wpscppro_advance_schedule_date":"","_wpscppro_dont_share_socialmedia":false,"_wpscppro_custom_social_share_image":0,"_facebook_share_type":"","_twitter_share_type":"","_linkedin_share_type":"","_pinterest_share_type":"","_linkedin_share_type_page":"","_instagram_share_type":"","_medium_share_type":"","_threads_share_type":"","_google_business_share_type":"","_selected_social_profile":[],"_wpsp_enable_custom_social_template":false,"_wpsp_social_scheduling":{"enabled":false,"datetime":null,"platforms":[],"status":"template_only","dateOption":"today","timeOption":"now","customDays":"","customHours":"","customDate":"","customTime":"","schedulingType":"absolute"},"_wpsp_active_default_template":true},"categories":[50],"tags":[],"class_list":["post-1655","post","type-post","status-publish","format-standard","hentry","category-weekly-analysis"],"blocksy_meta":{"styles_descriptor":{"styles":{"desktop":"","tablet":"","mobile":""},"google_fonts":[],"version":6}},"_links":{"self":[{"href":"https:\/\/www.investmentworld.eu\/ch\/wp-json\/wp\/v2\/posts\/1655","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmentworld.eu\/ch\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmentworld.eu\/ch\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmentworld.eu\/ch\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmentworld.eu\/ch\/wp-json\/wp\/v2\/comments?post=1655"}],"version-history":[{"count":0,"href":"https:\/\/www.investmentworld.eu\/ch\/wp-json\/wp\/v2\/posts\/1655\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.investmentworld.eu\/ch\/wp-json\/wp\/v2\/media?parent=1655"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmentworld.eu\/ch\/wp-json\/wp\/v2\/categories?post=1655"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmentworld.eu\/ch\/wp-json\/wp\/v2\/tags?post=1655"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
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