U.S. President Donald Trump has said the European Union is really a vehicle for Germany, but this advantage might run off a cliff if elections this year favor Brexit-style politicians who could destroy the euro and severely damage the German auto industry, at least in the short-term. In an interview with The Times of London before the inauguration, Trump dismissed the E.U. as a “vehicle for Germany.” German industry in general and the automotive industry in particular benefited hugely from the adoption of the euro single currency in 2002. Before the euro, Germany’s auto industry was forced to price its products in ever stronger deutschmarks. But the adoption of the euro gave it a huge competitive boost as the currency is weakened by much less efficient competitors within the eurozone. This would come to an end if the euro currency system collapsed.
The first serious test will come in April and early May when France holds its two rounds of presidential elections. There are usually two rounds in France. If no candidate wins more than 50% of the vote in the first round, on April 23, there will be a second vote on May 7 between the two front-runners. Front National candidate Marine Le Pen has pledged to withdraw France from the euro single currency if she wins. Opinion polls show a victory for her as a possibility rather than a probability at the moment. Le Pen currently isn’t the favorite to win, but polling experiences for the Brexit referendum and the U.S. presidential election means that many investors are readying for another surprise in France, and maybe Germany later.
Germany holds federal elections on September 24 which will decide the fate of Chancellor Angela Merkel. Holland has a general election March 15.