Mats Persson (Open Europe)
With 2015, the concerns surrounding the so-called grexit, i.e. Greece’s exit of Eurozone, are back. The fear is nurtured by preliminary elections that were won by a far-left political party SYRIZA, which offered voters a program incompatible with the reality of the Eurozone. However, it is not only Greece where the far-left parties are in their prime. Podemos, a Spanish party with a 20 percent support, promises to bring the end to the policy of budget cuts and fiscal responsibility. In addition, the new Portuguese government could emerge with a program against budget cuts as well.
The results of the upcoming parliamentary elections in the UK are difficult to predict with regard to the gradual change of the political party system. In the question of the EU in/out referendum, there is a number of scenarios concerning the plausible post-election coalitions. While Germany will remain a European hegemon in 2015 (not only) in the domain of foreign policy, it will also surely face many challenges. Primarily, these concern Germany’s relationship with Russia. Additionally, there are its internal problems related to increasing immigration and also the afore-mentioned development in Spain and Greece. Scandinavia will not evade the wave of national populism in 2015 either. Although a victory of a moderate center-right government is expected in Danish elections, it will not survive without a support of the Danish People’s Party which is often unflatteringly commenting on immigration. Moreover, in Polish parliamentary elections, the victory of the current Civil Platform-led government is expected, though one cannot rule out a surprising result of the Law and Justice party.
Last year, there were also discrepancies between main European capitals over the fulfillment of the budget criteria. Berlin and the European Commission have been pushing for the compliance with rules concerning a sustainable level of indebtedness, which will in turn lead to more conflicts among largest European economies. Furthermore, the efforts of the European Central Bank (ECB) to boost demand and deal with deflation are already deemed ineffective. Its steps will probably help the market only in the short term, however, in the long run, its policies will not miraculously produce better conditions in the Eurozone economy. Moreover, there will be an interesting institutional clash in 2015. The European Court of Justice will probably support the ECB in its purchase of bonds, a strategy which this was previously ruled as unconstitutional by the German constitutional court. Irrespective of the outcome, the ruling will constitute an interesting precedent regarding the real power of national central banks.
(The study can be downloaded here)