Italy, Portugal and the banks: Three big risks for Europe

EUROPE

Gemma Godfrey, head of investment strategy at Brooks Macdonald, explains why significant risks remain despite some better news for Europe.

European markets posted strong returns in the first quarter of this year, despite many of the region’s problems remaining unsolved. A region in recession, three key risks remain: opposition to Italy freeing their labour market; Portugal’s potential for requiring further rescue funds; and the European Central Bank’s failure to solve the banking industry provide potential pitfalls. The latest disappointment, a manufacturing industry contracting more than forecast, is merely the next knock in an overall shrinking group of countries. Just this month the European Central Bank reduced the outl...