Trouble Ahead in Europe

The EU situation seems to get more interesting by the day.  Moments ago the UK Parliament passed legislation handing PM May approval to start the Brexit process via Article 50 which she has flagged she will do toward the end of this month.  Some analysts explained the market’s almost immediate rebound after the Brexit vote as ‘the market sold like Brexit was an event when it’s really a process’.  Well that process just got real so it will be interesting to see how the UK and EU deal with reality.  Already the Scottish first minister has stated her intention to take Scotland to another independence (and hence stay in / return to the EU) referendum next year.

Over to the Netherlands and as we reported yesterday tensions have boiled over with Turkey increasing the chances of far right Wilders’ Freedom Party forming government in a couple of days time.  The more likely outcome will be a protracted process of forming coalitions adding more uncertainty to markets. The broader implication however is last night Turkey, in retaliation, stating the $3b EU immigration deal is now off, meaning they could unleash around 2 million more middle eastern immigrants into the EU.  That could well see even more support not just for Wilders in Netherlands but, more importantly, Marine Le Penn in France next month and more pressure on Merkel in September in Germany.  Germany matters less in a sense in that if France leaves the EU under Le Penn it is game over for the EU.  

Interesting times ahead to be sure.