Germany and France clashed yesterday, Tuesday May 28 as they disagreed over who should be the next EU Commission president. German Chancellor Angela Merkel put forward centre-right German candidate Manfred Weber to succeed Jean-Claude Juncker however, French President Emmanuel Macron did not name him as a contender. The issue stems from the European elections that have left the EU more fragmented as the traditional parties all lost ground, meaning that consensus will be more difficult.
The concern for the Euro is that with other top EU officials need to be replaced later this year with the tenures of EC President Donald Tusk, ECB President Mario Draghi and EU High Representative for Foreign Affairs Federica Mogherini all up with replacements needed to take over on November 1. If there are any delays to these postings, the delay could cause problems with legislation and economic policy.
Meanwhile, yesterday Italian bonds fell for a second day as the possibility that Italy could violate the European Union’s fiscal limits grew, after the EU elections strengthened the hand of Deputy Prime Minister Matteo Salvini and the League Party. The news also pushed German bonds into negative territory, a sign of growing concern of a country’s economic growth.
In a further data light day, markets will digest comments from European Central Bank member Mersch this morning, and look for direction from developments and fallout from the EU elections.
Europe stems tide of Euroscepticism