{"id":657,"date":"2024-06-18T10:48:27","date_gmt":"2024-06-18T10:48:27","guid":{"rendered":"https:\/\/eccellenzedimpresa.it\/magazine\/le-economie-vanno-bene-ma-lelettorato-non-e-daccordo\/"},"modified":"2024-07-16T10:49:12","modified_gmt":"2024-07-16T10:49:12","slug":"the-economy-is-doing-well-but-the-electorate-disagrees","status":"publish","type":"cp_magazine","link":"https:\/\/eccellenzedimpresa.it\/en\/magazine\/the-economy-is-doing-well-but-the-electorate-disagrees\/","title":{"rendered":"The economy is doing well, but the electorate disagrees"},"content":{"rendered":"\n

Fugnoli (Kairos Partners SGR): There is an inflation legacy that the public has yet to digest<\/strong>.<\/p>\n\n\n\n

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Economies are performing well, but sentiment is low, and this could guide voters’ choices, especially in the next major elections, starting with the French legislative elections between June and July, culminating in the big match in the United States in November.
\u201cElectoral phases,\u201d explains Alessandro Fugnoli, Strategist at Kairos Partners SGR, \u201cusually coincide with a period of economic momentum. The Fed claims to be restrictive, but in reality, it is not that restrictive. The Fed calculates a neutral rate, which is the rate at which it becomes restrictive, and this is considered by many in the market to be too low. Therefore, the actual neutral rate is significantly higher than what the Fed considers, which makes economic policy non-restrictive. This essentially means that the markets are at their peak, and the American economy is doing well.\u201d The signs of slowdown, according to Alessandro Fugnoli, are very modest in America. However, sentiment across the West remains quite low.<\/p>\n\n\n\n

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But why is this happening?
\u00abDuring the Covid years,\u201d Fugnoli continues, \u201cthere was a belief that broad electoral consensus could be achieved through massive reflation. We still feel this reflation today, but the public experiences it in the form of inflation, which is declining, but it is not yet reflected in prices\u00bb.
Therefore, economies are performing well, but the public is still struggling to digest this inflation legacy, which could have significant consequences, primarily for President Biden and, by extension, for the EU. According to Fugnoli, a potential re-election of Donald Trump could easily lead to a protectionist framework regarding the American economy, which would have repercussions on trade relations with the Old Continent.<\/p>\n\n\n\n

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Credit: Italian Prime Minster’s Office<\/p>\n\n\n\n


In France, President Emmanuel Macron must deal with a complex situation that, according to Fugnoli, is unlikely to translate into a stable government. \u201cThe programs of the right and left parties,\u201d Alessandro Fugnoli explains, \u201care presented as very radical by the centre one, which, in the meantime, highlights with calculations how costly their implementation would be. This is obviously aimed at shifting support towards the centre itself. There will be changes, but what I expect for France is not a clear shift, but rather a year of confusion.\u00a0 One of the risks is that it may not be possible to form a political government and that a technical government may be necessary.\u201d<\/p>\n\n\n\n

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Credit: Italian Prime Minister’s Office<\/p>\n\n\n\n

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The word belongs to the voters, and the only disruptive outcome would be a decisive victory for the Rassemblement National.\u00a0 This would enable Parliament to elect a government, even if the president disagrees, which is allowed under the constitutional reform of 2000, marking a first for the country.\u00a0 However, even in that case, Fugnoli urges caution, pointing out that a hypothetical right-wing government, different from the majority supporting the President of the Republic, would face significant challenges. \u201cContainment measures could come into play. The President may refuse to sign the laws.\u00a0 For the Constitutional Court, which is entirely pro-Macron, the European Commission, and the European Central Bank, an extreme-right government would be under close scrutiny.\u201d<\/p>\n\n\n\n

In this context, according to Fugnoli, particular attention should be paid to the second round on July 7, where the Rassemblement National will aim to secure votes from the centre. A heated contest with rapid developments, therefore. However, the final outcome could be much more nuanced and muddled. The biggest issue is that if France is in a “state of confusion,” even temporary, it negatively impacts European policies. The European Commission will be supported by essentially the same political forces, but its influence will be significantly diminished without France.<\/p>\n","protected":false},"template":"","meta":{"_acf_changed":true},"acf":[],"_links":{"self":[{"href":"https:\/\/eccellenzedimpresa.it\/en\/wp-json\/wp\/v2\/cp_magazine\/657"}],"collection":[{"href":"https:\/\/eccellenzedimpresa.it\/en\/wp-json\/wp\/v2\/cp_magazine"}],"about":[{"href":"https:\/\/eccellenzedimpresa.it\/en\/wp-json\/wp\/v2\/types\/cp_magazine"}],"wp:attachment":[{"href":"https:\/\/eccellenzedimpresa.it\/en\/wp-json\/wp\/v2\/media?parent=657"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}