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Our current situation analysis

EUR

Risk of a euro crisis

60 per cent

Our detailed decision tree analysis calculated the original risk of a new euro crisis around the critical elections in several EU member countries in and around 2017 and resulted in a risk of some 50 per cent for the period of the following 12-24 months back then. Now, a possible no-deal Brexit with its repercussions in the financial industry and among already shaky Italian banks in particular threatens to continue where the elections in Italy at the beginning of 2018 ended (see last update below). We will resume this spotlight once a no-deal Brexit might begin to loom after the summer and/or potentially divisive results in the European elections in Italy might trigger the downfall of the populist coalition.

+++6 March 2018: The elections in Italy have yielded the very result we had been anticipating ever since the beginning of last year (see chart and our running commentary in section “Economic Ticker”), with the eurosceptic Five Star Movement and the Lega, respectively, emerging as the winners. Since there are several areas of common ground between the two populist parties, a scenario of a coalition between the two is on the cards, resulting in a substantial threat to the integrity of the Euro Area. All told, that raises our risk level to 60 per cent.+++

See theĀ January issue of our monthly bulletin for a detailed analysis of the Italian election, too!

Decision tree euro crisis