EZ: the political conundrum - ING

In respect to the EZ's positive-looking economic performance for 2018, analysts at ING Bank, say, "true, politics could still cause upsets, but probably not enough to spoil the growth party, we believe". 

Key Quotes:

"With the pro-independence parties still holding a majority after the regional elections in Catalonia, the problem is not going to be solved rapidly, though we don’t think that the Spanish economy will suffer significantly from the current stalemate. That said, some negative impact cannot be avoided. The budget for 2018 has still not been approved, as the Basque National Party is refusing to support the draft budget of Rajoy’s minority government, as long as the Catalan issues have not been settled."

"In Germany, there is still no new government, which is quite unusual for the country. It is still unsure whether the SPD party members will give the green light to another grand coalition. The biggest problem that the current power vacuum creates is European, as in the current circumstances Chancellor Merkel doesn’t have a mandate to support. Emmanuel Macron’s ambitious reform plans for the Eurozone."

"Finally, 4 March has been set as the date for the Italian general elections. For now, it looks likely that there will be no clear winner, making the formation of a workable coalition difficult, but we consider the likelihood of an anti-European coalition to be quite small (about 10%)."