Despite a number of on-going issues within the European Union at the moment, the euro currency is actually enjoying a lot of support from those that use it, although there is one stand out member that bucks the trend.
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According to the annual Eurobarometer survey a large majority in all 19 Eurozone countries that use the euro are happy to do so, with Ireland, Luxembourg, Slovenia and Spain being the happiest. Almost 3 out of 4 of the total 17,000 people polled said the euro is good for their country, although unsurprisingly Italy stands out as one of the least convinced countries on this topic.
The Italian Coalition Government has been at loggerheads with the EU for months now regarding its Budget and how much the EU is prepared to allow Italy to spend domestically. When the UK leaves the EU Italy will then be the 3rd largest economy in the Eurozone so it’s of course a concern for the EU, and comes at a bad time considering the UK’s plans to leave next year.
The Italian Coalition consists of the peculiar partnership of far-left Five Star Movement and far right Italian League. Despite their differences a unifying belief of the two parties are their opposition to abide by the EU’s spending guidelines, and this is putting pressure on the relationship between them and the EU.
I expect the euro to come under pressure if this issue persists, and the Italian Government is also in discussions regarding the migration policy which is another issue the EU must contend with.
Throughout the year we’ve seen the issue of the budget impact EUR exchange rates, and the same could happen this week so do get in touch if you wish to kept updated.
Sometime today the European Commission is expected to respond to the Italian Budget proposals for the 2nd time. This is of course worth being aware of for the reasons discussed earlier.
Tomorrow there will be an ECB Monetary Policy Meeting Accounts report which will cover monetary policy. The ECB expects to wind down its asset purchasing plan at the end of this year so I would expect to see any changes to this plan impact EUR exchange rates.
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