If 2016 was full of political surprises, this year promises to deliver even more blows. March will set the tone. It’s the month the Dutch head to elections that could score a win for Geert Wilders’s anti-establishment Freedom Party, the U.K. will formally trigger the process to leave the European Union and Chancellor Angela Merkel will get a sense of how furious Germans are over the refugee crisis in a state poll that could presage trouble in the coming general election.
To discern which events investors cannot afford to ignore, below is a calendar and some insights on what analysts, including Bloomberg Intelligence, are on the look out for.
“March will be the first real political hurdle for Europe in 2017,” said Maxime Sbaihi, an economist at Bloomberg Intelligence in London. Brexit is key, but for him the Dutch elections are almost more important. “The fact that the euroskeptic party is currently polling first makes the Dutch vote one of the most risky of 2017,” he said. “Contrary to the United Kingdom, the Netherlands is a euro member and a pioneer country of European construction so shaky politics there could have more significant consequences for the region than the Brexit vote in 2016.”
Things then start hotting up in the euro area’s biggest economies. In France, the National Front’s Marine Le Pen is running in second place in the contest for May’s presidential election. In Germany, Merkel will face re-election in the fall. In Italy, a snap vote at any point will give the populist Five Star Movement an opening.
Eurasia Group analysts led by Mujtaba Rahman see a Le Pen victory as the single biggest risk and assign it a probability of 30 percent. In a note to clients, Eurasia wrote that her win “would push France’s euro membership to the precipice if markets lose confidence in the conditional nature of” the European Central Bank’s bond-buying program.
ECB President Mario Draghi, who in 2012 committed to do “whatever it takes” to preserve the single currency, is bracing himself for the worst. At a briefing of leaders at a December summit in Brussels, he singled out the unusual number of elections as one of the biggest challenges for the EU this year.
Not all the inflection points are European in nature. With so much hinging on the kind of relationship Putin and Trump will strike, Europe will be the setting for some of their most interesting interactions. The two men have yet to meet face to face and it might just happen in May at an ancient Greek theater on the island of Sicily -- where Italy hosts the Group of Seven summit.
2017 calendar of events
Jan. 1, 2017 - Italy assumed G-7 presidency
Jan. 12 - Cyprus reunification endgame talks begin in Geneva
Jan. 17-20 - World Economic Forum
Jan. 20 - Donald Trump assumes the U.S. presidency
Jan. 22 & 29 - French Socialist primaries
Feb. 3 - EU leaders meet in Malta
Feb. 12 - German presidential election by special assembly
Feb. 17-19 - Munich Security Conference, with possible Trump administration speakers
March 8 - U.K. Spring Budget
March 9-10 - EU leaders meet in Brussels
March 15 - Netherlands parliamentary elections
March 17-18 - G-20 finance chiefs meet in Baden-Baden, Germany
March 24-25 - EU leaders meet in Rome to mark 60 years of Treaty of Rome
March 26 - German state election in Saarland (ruled by a coalition of CDU/SPD)
March 31 - U.K. to trigger Article 50 starting Brexit process by end of March
April 10-11 - G-7 foreign ministers meet in Lucca, Italy
April 21-23 - G-20/IMF/WB meetings in Washington
April 23 - French presidential election first round
May 4 - U.K. local elections - first electoral test post-Article 50
May 7 - French presidential election runoff
May 7 - German state election in Schleswig-Holstein (SPD/Greens)
May 11-13 - G-7 finance chiefs meet in Bari, Italy
May 14 - German state election in North Rhine-Westphalia, country’s most populous state (SPD/Greens)
May 26-27 - G-7 leaders summit in Sicily
June 11 - French parliamentary elections first round
June 18 - French parliamentary elections second round
June 22-23 - EU leaders meet in Brussels
July 7-8 - G-20 leaders summit in Hamburg, Germany
September [possible] - German federal elections
