The staff of Fortune recently assembled its predictions for 2017. Here’s one of our forecasts.
With big elections coming up, Europe’s power structure will continue to churn. But don’t expect too much change too fast.
1. Veteran conservative Alain Juppé will be elected president of France in May, beating Nicolas Sarkozy to the nomination from the center-right UMP party, and seeing off the Front National’s Marine Le Pen in the run-off. But hey, it’s France. Don’t expect it to change too much.
2. Across the Rhine, Angela Merkel will win a fourth term as Chancellor of Germany, heading a renewed “Grand Coalition” with the Social Democrats. However, the two stalwarts of Germany’s political mainstream will leak votes to fringe parties on both the left and right, mainly to the anti-foreigner Alternative für Deutschland. Again, expect continuity.
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3. The euro will overtake the pound. Concerns about the U.K. economy will grow, further straining Prime Minister Theresa May’s government. Meanwhile, a rebound in inflation will stop the European Central Bank from meaningfully extending its quantitative easing program, driving the euro higher—at least until the rise in long-term interest rates on bond markets revives fears about the Italian banking system and economy. May will likely trigger Article 50 of the EU’s treaty, formally starting the thorny process of separation. And after September, with Juppé and Merkel enjoying their fresh mandates, a Brexit compromise will start to take shape. But don’t expect too much progress—talks are likely to kick difficult decisions about trade and migration way down the road under the guise of a long ‘transitional’ period.