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Europe: Five Big Surprises for 2019

Dealing in alternate realities is a tricky business. As is often noted, predictions are hard, especially about the future

By: EBR - Posted: Thursday, January 3, 2019

With the chaos of Brexit ever-rising, disillusionment sets in in the UK. It dawns on enough people that maybe it was not so wise to go it alone. The May government unveils its secretly developed plan of founding an “alternative EU” (AEU). The British Prime Minister is in talks with Northern European countries and with Ireland on closer cooperation
With the chaos of Brexit ever-rising, disillusionment sets in in the UK. It dawns on enough people that maybe it was not so wise to go it alone. The May government unveils its secretly developed plan of founding an “alternative EU” (AEU). The British Prime Minister is in talks with Northern European countries and with Ireland on closer cooperation

By  Martin Hufner*

I suspect that all of us are sadly aware that, in 2019, we will discover that there are more and more “little Trumps” in the world – political leaders who want to profile themselves through pursuing the unexpected to the outrageous.

But that’s no surprise. Below are a few of my candidates for what could happen on the European and the global stage in 2019:

Surprise #1: By the UK

With the chaos of Brexit ever-rising, disillusionment sets in in the UK. It dawns on enough people that maybe it was not so wise to go it alone. The May government unveils its secretly developed plan of founding an “alternative EU” (AEU). The British Prime Minister is in talks with Northern European countries and with Ireland on closer cooperation.

Official Brussels is “not amused.” The German government is tempted. It feels the AEU may provide it with a real backstop, in case France goes really wobbly, in which case the other EU powerhouse may be better suited to lead the EU’s Southern (euro)zone.

Surprise #2: By Italy

The populist government in Rome finally acknowledges that the Italian people do not want to leave the euro – or the EU. What to do under such circumstances?

The new revolution to finally lead the country out of the prolonged economic and political misery is to make a radical cut in public debt. As soon as that is accomplished, Italian banks are in much better shape again. The Maastricht debt criteria are finally met.

The government can once again invest and pursue the desired redistribution from top to bottom. Until recently an outlier, if not an outcast, Italy is suddenly the model state in the eurozone, much to the annoyance of many of other, especially Northern European members.

Surprise #3: By Germany

In Germany, the SPD finally gives in to the inevitable. Recognizing that the CDU is quite unassailable in taking away voters in the center, a merger with The Left party is seriously contemplated.

To that end, earnest talks are held. Then, a surprise announcement is made. Given how little political success was associated with making Andrea Nahles the first woman leader of the once glorious SPD, the remerged SPD (Die Linke was a split-off from the mothership in 2007, incidentally by Wagenknecht’s own husband, Oskar Lafontaine) wants to hold on to a woman as leader of the joint party.

Sahra Wagenknecht becomes the new head of the party. Over the course of the year, not least owing to the new chairwoman’s restrictive stance on migration, the new political formation manages to attract sizable parts of AfD voters.

Intriguingly, it simultaneously attracts Green party voters who are disappointed in the Greens having clipped their traditionally influential left wing too much.

Surprise #4: By the ECB

The European Central Bank turns gutsy. In response to complaints by business and banking, it tackles the overall weakness in the European economy by surprisingly announcing that it will cut its interest rates to zero in the spring of 2019.

This initially leads to a huge crash on the financial markets, because many investors are caught wrong-footed. But once market participants realize that this is best for the euro currency and for themselves in the long run, the mood turns around. Stock prices in Europe are picking up again.

Surprise #5: Europe’s new leader

Following a fierce battle between the top party lists’ candidates in the run-up to the May 2019 European Parliament elections, the Europeans heads of state and government ultimately decide to say “no” to any of them.

Instead, they select Christine Lagarde as the new Commission President, until then the head of the International Monetary Fund.

After having been selected as the first woman to head up the IMF since the institution’s inception in 1944, Ms. Lagarde makes it a second “first” – by becoming the first woman European Commission president since the EU’s original conception in 1957.

Recognizing that this is a long overdue move, the European Parliament swallows its pride in once again having been supplanted as the key selection mechanism for the EU Commission leader.

Ms. Lagarde announces that her new Commission will especially focus on promoting democracy at all levels of government throughout Europe. That, she argues, is the best political medicine to stop a further rise of populist nationalism and the more general disenchantment with politics.

*Former chief economist of Germany's HVB Group
 ** First published in theglobalist.com

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