...Reform Moves Down Agenda: Migration and security policy will dominate Europe's political agenda in 2016, inevitably leaving less room for ongoing efforts to improve budget coordination and drive European and national structural reforms. These new challenges are also likely to push voters further away from mainstream parties, further weakening governments' willingness to continue with politically costly (but economically beneficial) reforms. Policy Risk Rises in Iberia: The recent Portuguese general election has produced a minority government and the upcoming Spanish poll is likely to do the same. Given the still-weak fiscal positions of both countries, the risk of fiscal slippage in 2016 has increased in Fitch Ratings' view. In Spain, tensions with Catalonia are likely to persist in 2016. Fiscal Stance to Loosen: Europe will continue its trend of easing up on fiscal measures in 2016. Overall, we expect fiscal policy to be mildly expansionary. While this is growth-friendly and not significant...
