Follow us
Select Page

Will European markets brush off political uncertainty in 2017?

by | Jan 9, 2017

After surprise results in the UK referendum and the US presidential elections and with the number of major elections due, there is a danger that Europe will be all about politics in 2017. Commentators preaching the continuation of the status quo have not had a happy time recently but we are sticking our necks out and saying that there will not be any political shocks in 2017.

Right wing populist parties are poised to make a strong challenge in both the Netherlands and France although Angela Merkel looks to be a sure bet to hang on in Germany. Recent hype following the political upsets of 2016 has built up their perceived chance of success in the popular imagination but our view is that they will fail in their attempts to gain high office. The major uncertainty is the French Presidential Election both for the unpredictability of the result and for its importance to the rest of Europe.

The National Front’s Marine le Pen looks set to make it into the second round, probably to face Republican Party candidate François Fillon. At that stage, however, the opinion polls make Fillon the overwhelming favorite with nearly a 2/3 to 1/3 advantage. Faith in opinion polls is of course waning. Trump came from behind in the polls to win and, indeed, Fillon came from well behind to overtake Juppe in the Republican primary in France. In the main event, however, le Pen will be one of three candidates with a chance and the French have a habit of using tactical voting to keep out the National Front.  There is a lingering worry that the conservative reformist policies of Fillon (he describes himself as a Thatcherite) could push some socialist voters towards le Pen in the second round but it is unlikely that they will be in sufficient numbers to make a difference.

Were le Pen to win it would be a severe shock to the political and economic establishment in the EU. She has shown signs of compromise on EU and single currency membership (she is no longer in favour of France leaving the EU or of the franc floating freely) but would be very unlikely to back down on immigration curbs. If nothing else, this would make for very interesting Brexit negotiations if the French President was at one with UK negotiators in opposition to the freedom of movement of people.

Elsewhere, Italy will continue to be in the spotlight as long as the post referendum political certainty persists, particularly because of the interconnected uncertainty over the economy, politics and the banks but, even there, the survival of the new government is the most likely outcome for 2017.

Even if we are right, it does not mean that the elections and Italian-style crises themselves will not generate considerable market uncertainty but this will be transitory. In any case, economies and property markets can live with uncertainty – witness the performance of Spain without a government for much of 2016 and the UK in the face of post-referendum uncertainty.

Regional office market expectations in 2019

Regional office market expectations in 2019

2018 was an outstanding year of office take-up across the UK regional and SE office markets. Can 2019 reach the same dizzying heights? CBRE’s new UK Office Property Perspective reveals record breaking take-up activity (of nearly 7.5 million sq ft) in...

Smarter Cities 2025

Smarter Cities 2025

The term “smart” can be a prefix for a whole host of things: phones, motorways, tickets, cards, buildings.  And also cities, many of which are making concerted attempts to become smarter as a way of generating a range of economic, social, cultural and...

UK offices: the return of the public sector

UK offices: the return of the public sector

Over the past three years, HMRC have taken over 2.2 million sq ft of new office space across 11 regional centres. But have these deals been pivotal to the success of the UK regional office markets or have they simply added to the already growing...

Financial services: why we can bank on London

Financial services: why we can bank on London

CBRE’s latest London report ‘Why we can bank on London’ explores the three key challenges facing the financial sector: Brexit, changing regulation and the growing influence of fintech. The UK is the most specialised major economy in financial services...

London’s technology and creative cluster might appear to be Brexit-proof but there is no room for complacency

EMEA Office Outlook 2017: The Occupier Takes the Wheel