And dismay, because the size of his winning margin can’t be ignored, and it signals further dissatisfaction with the current political status quo, not just in the UK but across Europe. However, in a remarkable “volte-face” to his past history, Corbyn admitted that he could not foresee himself campaigning to leave the EU.
Suddenly, the prospects of Brexit just receded a little bit. But we continue to remain cautious about investing in UK gilts at current yield levels
- Europe’s greatest crisis yet?
Less than three months ago, the European investment-grade fixed income team thought Europe might face its greatest crisis yet as Greece’s future was debated and voted upon. Ultimately, sanity prevailed and the great Euro project continues. However, developments over the last month have highlighted how great the differences truly are amongst members of the European Community.
When confronted with one of the biggest humanitarian crises Europe has faced in the last 60 years, we have witnessed starkly different reactions amongst European Union members to the thorny question of accommodating refugees. Whilst Germany (and, once again, Mrs Merkel) displays great moral leadership, and is rightly praised for accepting over 800,000 refugees, other countries have been less forthcoming.
One of the greatest outcomes of the European project has been the free movement of people within the European region. Germany, with its aging population, stands to benefit enormously from a young immigrant workforce, with some studies suggesting it could add almost 0.4% per annum to GDP, assuming successful and peaceful integration of refugees.
But other countries may not be as welcoming, especially when youth unemployment levels are at historically high levels, and people are struggling to make ends meet. We have warned in the past about the rise of anti-austerity, nationalistic parties.
Unless the EU finds a coordinated and humanitarian approach to this crisis, there is a risk that the union may be viewed as a gathering of separate nations rather than a single entity. As we have said in the past, peripheral European sovereign spreads, in our opinion, could be a lot wider in such a scenario.