Page 44 - Linkline Spring 2017

2017: Euro Tunnel-Vision?
With elections in France, Germany and now Britain, coupled with impending Brexit negotiations, 2017 is a make or break year for Europe. For Irish exporters this will be a particularly precarious period. Philip O’Sullivan discusses the possible outcomes and how exporters can prepare against adversity.
“The euro”, said Germany’s Angela Merkel, “is our common fate, and Europe is our common future”. Those remarks, made amid the turbulence of the
Eurozone debt crisis, still seem relevant now six years on. Following last year’s Brexit earthquake, Europe will now be visited by a series of tremors, at minimum, in 2017. The election in the Netherlands in March was the first, but it will soon be followed by elections in France and Germany, along with the next instalment of the Greek debt saga and challenging negotiations over the terms of Britain’s EU divorce. How these play out may have far-reaching consequences.
With approximately half of all Irish exports going to the UK and continental Europe (and around 70% to countries outside of the Eurozone), firms here are far from disinterested observers where the above events are concerned. A further complicating factor is that betting odds and opinion polls are now seen as debased currencies, so where market participants might have previously considered the outcome of an event to be a foregone conclusion, they are now more likely to be nervous until after the votes have been counted.
Indeed, while we might not see it happening, further departures from the European project cannot be entirely ruled out, especially given the poll ratings of some Eurosceptic elements on the continent. While it is hard to isolate the extent to which the market is pricing in this risk, if perceptions of their electoral prospects change, then this will have implications for the euro. The prognosis, therefore, is for greater FX volatility, which will put a lot of strain on Irish exporters.
The first threat faced by Europe this year was the Dutch election that took place in March. It had been dubbed the “quarterfinals” of European politics; the “semi-finals” and “finals” being the French and German elections later this year. Though early polls suggested Geert Wilders’ far-right PVV was on course to become the largest party, in the end the serving Prime Minister, Mark Rutte, came out ahead by a decent margin. This was a positive result for Europe, but it was certainly no defeat for the far-right movement. In reality, Wilders won 20 of the total 150 seats in the Dutch House of Representatives (gaining five seats extra, growing his party’s representation by a third). And crucially, to counter Wilders, mainstream conservatives had to mimic his populism. Parties like the centre-right VVD and the Christian CDA jumped on the train of conservative identity politics, taking a stronger stance on immigration and promoting nationalism.
As the dust settles on the Dutch election, attention has shifted to the first round of voting in France’s presidential election. The two victors, Emmanuel Macron and Marine Le Pen, who were narrowly divided on 23.75% and 21.53% of the vote respectively, are set for a run off in the second round.
Polls suggest that Eurosceptic Le Pen will be beaten by centrist candidate Emmanuel Macron as he will inherit votes from other candidates now eliminated but as we have seen in both the US and UK in the past year, surveys cannot be taken as gospel. However, even if Le Pen becomes president her party is very unlikely to secure majorities in both the Senate and National Assembly which would be needed to amend the
44 The Chartered Institute of Logistics & Transport
EURO TUNNEL-VISION