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European Outlook 2017 : Changing Landscape

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European Outlook 2017 : Changing Landscape

2016 saw a series of unprecedented changes in the geopolitical landscape following the United Kingdom’s vote on its European Union membership. With further elections in 2017, including in the Netherlands, France and Germany, a new type of uncertainty emerges due to surging populism. This trend is driven by a long period of fiscal austerity, loose monetary policy and globalism, which have collectively served to leave behind and embitter large swathes of
society. The uncharted territory following political shocks make it almost impossible to assess their effects, which will partly depend on future relationships between the UK and EU, the extent of protectionism instituted by Donald Trump during his US presidency and how Italy manages the fallout from the resignation of Prime Minister Matteo Renzi following the Italian referendum.

In terms of capital markets, the US Federal Reserve is the only major central bank on a tightening cycle. Policy divergence is expected to lead to volatility in the capital markets, notably in the bond market, which could have a material impact on weight of money and discount rates used to value investment cash flows.

Source : Savills Investment Management

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