Why Deutsche Bank thinks the ECB is in for a tougher time following the Trump victory

 
Hayley Kirton
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Nothing in politics is stable right now, the bank pointed out (Source: Getty)

Donald Trump's triumph at the US elections could cause Mario Draghi some headaches, according from Deutsche Bank.

In a note published early this morning, when Trump's win was clearly on the cards but not yet officially announced, the bank noted a combination of factors that could possibly be triggered by the result – a downward drag on equities, a possible drop in government yields in the euro area, less appetite for private investment spending and a potential clamping down on trade deals – could make it more difficult for the European Central Bank (ECB) to push its monetary policy measures front and centre.

Read more: Remember when UK politicians debated banning Donald Trump from the UK?

Deutsche Bank also noted the revelation of somewhat surprising new president-elect came at a time when Europe was already anxious about various other political issues. Not only is this side of the Atlantic still trying to figure its way through June's Brexit decision, next year will see general elections in both France and Germany while Italy will face a constitutional referendum before the end of this year.

"This uncertainty will constrain the euro-area recovery via both real and financial channels," Deutsche Bank concluded "It underscores our expectation that euro-area GDP will slow in 2017. A slowdown in the already mediocre euro-area recovery will further complicate the ECB task."

Deutsche Bank itself should know about the effect Trump's victory is having on share prices. Shares in the German giant are currently down 1.9 per cent at €12.65.

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