Page 7 - ISQ UK_October 2017

OCTOBER 2017

Setting a Legacy:

Mrs Merkel and the Future of Europe

Chris Bailey, European Strategist, Raymond James Euro Equities*

"Worry about going out there and making your own legacy" Floyd Mayweather, Jr.

In the hard knocks world of politics, Angela Merkel looks likely to
go down in history, as undefeated in Chancellorship elections as
Floyd Mayweather was in the ring. However, her triumph in the Fortunately for Mrs Merkel, the
late September elections was tempered by the need to form a new current political and economic
ruling coalition to allow her to effectively rule in her eleventh year
as Chancellor and beyond. As a student of history, Mrs Merkel will backdrop for the Eurozone
be fully aware of the troubles her political mentor Helmut Kohl ran provides plenty of opportunities
into near the end of his reign as Chancellor, and will be determined
not to repeat these errors. for the de facto leader of Europe
to build this legacy
Fortunately for Mrs Merkel, the current political and economic
backdrop for the Eurozone provides plenty of opportunities for the
de facto leader of Europe to build this legacy. Whilst the German
economy has performed respectfully over recent years aided by an
export focus, the rest of the region has struggled, political unity
has been poor and the criticism of German leadership has been The next stage is unlikely to be as naturally cordial however.
high - and not just in Southern Europe. There is much work for Mrs Particularly in a post-Brexit world, the Eurozone will look to
Merkel to do and the next five years is likely to be the crucial epoch simultaneously reform and pull together - in short try to get closer
to achieve this. to the classic Anglo-American ideals on entrepreneurship and
building economic dynamism, whilst also acknowledging a greater
Of course she has found a willing high level political partner in the role for regional payment stabilisers and economic and taxation
form of Emmanuel Macron, the President of France. In a move centralisation. The first half of these policies are likely to be well-
reminiscent of the famous Mitterand-Kohl combination of the received both by Mrs Merkel and the German populace, who have
1980s and 1990s, the leaders of the two most important Eurozone long been exasperated by the actions of many of their fellow
countries have the opportunity to drive forward the debate on the Eurozone politicians and citizens. The latter is largely privately
future of the region at multiple levels. Early signs about this supported by the German political leadership but, as shown
combination are good, with President Macron borrowing much of recently by the slightly lukewarm reaction to an idealistic speech
the tone of the 1990s German labour market reforms in his own by Emmanuel Macron about the future of the Europe, Angela
efforts to improve the dynamism of the French economy, changes Merkel will tread a little carefully whilst bedding down her likely
which unsurprisingly Chancellor Merkel has publicly supported. new political coalition.

*An affiliate of Raymond James & Associates and Raymond James Financial Services
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