By Kevin Chambers
Over the first weekend of May, Emmanuel Macron was announced the victor in the presidential election in France with over 60% of the vote, demonstrating the commitment of the French people to the European Union and providing an encouraging sign for European companies. We will take the time to look back on the last few years of European investments and what we can expect for the future.
The European Union is an organization of 28 countries. It is an agreement to share political and economic legislation. The EU makes up 7% of the global population; however, the EU accounts for 20% of global trade (The Economy, 2017). The GDP of the EU is over $16 trillion, just behind the United States, making it the second biggest economy in the world and an important economic hub for the world.
Recent Economic History
The recent economic history of the EU can be boiled down to three major events. First was the 2007-2008 crisis. Europe suffered more from the 2008 financial crisis than the US and other developed nations. While the US stock market lost 37% and the Japanese stock market lost 29%, the EU markets lost 46%. The second was the European credit crisis in 2011. Greece, Portugal, Spain, Cyprus, and Ireland all faced collapsed and needed to be bailed out of debt. Finally, the recent announcement of the UK leaving the union. These events, one after another, have hampered European growth over the last 10 years. Europe lags behind most other developed nations, including Australia, Singapore, Hong Kong, The US, and Japan.
Compounding the problem to some degree, the most financially successful European country recently has been Switzerland, which is not part of the EU. In previous blog posts and papers, we have reviewed the different crises and explained their outcomes as well as looked at specific markets and the challenges they face. Here we will consider the current state of Europe after the French election.