“Macron’s victory is certainly good news for political supporters of the European project as his programme focuses on a deeper integration and better cooperation between the various countries in the Union,” said Steven Andrew, macro fund manager at M&G. It’s vital for Macron to build a good rapport with Chancellor Merkel (or her possible successor after elections in September) for his potentially transformational plan of installing a eurozone finance minister with a separate budget to succeed.
The Italian job
But even if the Franco-German axis is revived to its former status (the times of ‘Merkozy’ indeed seem very long ago now), that may be of little importance if the EU’s third biggest economy messes up. France may be in urgent need of economic reforms, with a debt-to-GDP ratio of 96% and unemployment still close to 10%, but Italy is the undisputed ‘sick man of Europe’ with a debt-to-GP ratio of 132%, youth unemployment of 34% and an ailing banking sector.
And, indeed, Italy was the only country where Macron’s rise failed to inspire investors: less than a third of Italian fund buyers have a positive macroeconomic outlook there, by far the lowest figure in Europe. If the eurosceptic Five Star Movement wins parliamentary elections in Italy next year, Europe may very quickly find itself in crisis-mode again.
