New EU fiscal rules may crimp member states' investments in strategic areas - BofA
Investing.com -- A revamped European Union fiscal framework could restrain the budgets of many of the bloc's member states to make critical investments, analysts at Bank of America Securities argued on Friday.
This week, the European Central Bank warned that high debt piles may crimp the ability of European countries to address shocks from geopolitical tensions or elevated interest rates. This vulnerability, the ECB added, could have "negative financial stability effects" and worry investors, particularly ahead of a host of elections across the EU this year and next.
But the BofA analysts flagged that under the EU's reformed fiscal framework "the hands of national fiscal policy are likely to remain tied in the areas of critical investment" for the region, such as green energy, defense, and digitalization. "Ideally, a shortfall can become an opportunity: 'more Europe' should step in to fill the gap," they wrote. "From a political standpoint, the bar is high. But exogenous geopolitical events may push for earlier action ."Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors.
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