In his latest client note, Brian Martin, Analyst at Australia and New Zealand Banking Group (ANZ) offers insights on the key challenges that the euro is likely to face starting out the new decade.
“The euro is starting the new decade with a growth crisis in Italy and an extremely limited policy arsenal. The current restrictive fiscal framework needs to be addressed and the incomplete banking and capital markets union completed.
Italy will hold a regional election in the traditionally left-wing stronghold of Emilia-Romagna this weekend. A victory for the right-wing Lega Party would exert serious pressure on the fragile coalition government in Rome and push BTP yields higher.
Ensuring the euro in its current format is a continued success means that it must work for all member countries. That is not the case at present. The new EU Commission cannot be complacent and must champion growth.”