EU Searching For New Identity as Elections Come To A Close

eu4Europeans took to the polls over the week-end and voted in the highest number of members of the European Parliament skeptical about the future of the European Union.

Despite a low voter turnout rate, the outcome from the recent elections will reverberate in future national politics and EU policies.

France’s right-leaning and EU skeptic party Front National led by Le Pen won the election in France as did anti-immigrant People’s party in Denmark.

It is still unclear whether Marine Le Pen will be successful gaining enough future votes from other parties in other countries to form a majority voting bloc in the parliament.

In Austria the far-right Freedom party won the majority vote.

In Greece, leftist party Syriza with its leader Alexis Tsipras was victorious and won against Greece’s main two political parties: New Democracy and Pasok.

Syriza remains fundamentally opposed to deep spending cuts across Greece’s government as a condition of an economic rescue package that Athens accepted from Brussels over the past two years.

Italian Prime Minister Matteo Renzi managed to overcome anti-EU comic Beppe Grillo and could be on the right footing to push for greater reforms in Italy according to early exit polls in Italy which have not always been reliable in the past.

Later today ECB President Mario Draghi will provide a keynote speech.

Investors will be listening closely for signs about what the ECB plans to do in their next policy meeting in June.

The consensus view among economists is that the ECB will ease further in June.

But the degree to which the ECB eases remains an open-ended question.

In mid- May eurostat reported that growth in the euro area measured by GDP (Gross Domestic Product) grew only 0.2 percent during the first quarter of 2014 while annual inflation was 0.7 percent in April, up from 0.5 percent in March, but still well below 1.2 percent in the same period a year ago.

The ECB wants to avoid low inflation and has set an annual inflation target just below 2 percent.

ECB President Draghi said the ECB Governing Council was “comfortable with acting next time” in reference to the ECB’s next policy meeting on June 5th.

Economists are expecting the ECB to cut its main  interest rate below 0.25 percent while bank overnight deposit rates could even turn negative at the ECB, a move that is intended to spur more greater lending and investment across Europe.

The ECB’s current overnight deposit rate is 0 percent.

-Johnathan Schweitzer

 

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