Importance of European elections
Further complicating matters is the swathe of elections across Europe. Any signs that the Greek crisis is being mismanaged will be leapt upon by Eurosceptic insurgents, and existing leaders in key European states will be unwilling to accept any resolution that would prove unpopular with voters at home.
That adds an extra edge to how Grexit might play out on the markets – meaning it could have wider repercussions in 2017 than two years ago. Watch out for movement in the euro, European indices, and bond prices around the following key milestones:
15 March: Dutch election
The Dutch election on 15 March marked the beginning of ‘election season’ in Europe, which was seen as potentially problematic for negotiations. A victory for pro-EU Mark Rutte over Geert Wilders, though, means one potential pitfall has been avoided.
23 April: French election first round
Fears that Grexit could lead the euro to crumble are much more real now than they were in 2015, but the threat from Marine Le Pen is arguably far greater. While negotiations are unlikely to hit crisis-levels before the French go to the polls, any sign that a resolution is proving illusive – or that Greece is being let off lightly – would be seized upon by the National Front leader.
Should Le Pen win out in the second round of voting on 7 May, Grexit could fast become irrelevant. She’s promised to take France out of the euro, and wants to disband the single currency.
July: Greek capital runs dry
Greece’s debt talks are still some way from reaching crisis point. In July, that will no longer be the case.
By then, Germany’s federal elections will be on the horizon. Greek debt is a major talking point in Germany, so there is a huge incentive to get Grexit off the agenda before campaigning begins in earnest. If talks do continue right up to the deadline, German negotiators may be forced to take a harder line. That could prove disastrous for Greece.