The coming 2/3 months look decisive for Europe, against the backdrop of recession in eight EMU member states and rapidly growing popular discontent.
What are the main scenarios?
Best Case – Europe adjusts its policies and sucessfully ringfences the problems in Greece, allowing the current investor panic to subside while the Euro economy gradually recovers later this year, led by a strong Germany.
Bad outcome – Greece leaves EMU causing a major shock to markets but the event is relatively contained due to a considerable degree of support by Central Banks.
Worst outcome – Greece and perhaps other countries leave EMU in a disorderly manner, causing a considerable amount of capital flight, brushing aside the best efforts of policymakers, the equivilant of the 2008 financial crisis.
What are the key dates?
- EU Summit – 23rd May and then 28-29 June
- Fiscal referendum in Ireland – 31st May
- ECB monthly meeting – 6th June and 5th July
- Parliamentary elections in France – 10 and 17 June
- Elections in Greece 10 or 17 June
- European finance minister meetings – 21 June
- European Stability Mechanism
Will Greece leave the EU?
At this stage no-one can say for certain it’s 50-50. Some experts sees it as a 5-10% probability, others as high as 50-75%.