Parliamentary Elections Underscore Challenges for EU

Those leaders who believe in the European Union will have to think hard about how to keep it intact and meaningful in a context where nation states want more power and independence.

Not an easy task at all, Thelin said, but certainly key for Europe going forward, because even if currently, the center right/pro EU European Peoples Party still holds the majority in the European parliament, independence from the EU is a key item on countries' lists, and likely to be fueled further by an upcoming Scottish referendum for independence, which, if successful, could in turn spiral onto Spain, where the region of Catalunya has been clamoring for its independence.

Immigration

For outside observers such as Clem Miller, investment strategist at Wilmington Trust Advisors, the landslide victory of the extreme right National Front party in France is a strong wake-up call to the key issue for Europe today: Immigration. Over the past years—and even, some argue, since the time borders between countries were removed—Europe has experienced a boom in immigration, much of it illegal. The latest influx of thousands of immigrants from Syria has also drawn media attention.

On the one hand, Europe's aging population makes a case for immigration. However, the anti-immigrant stance in many countries has been going on for a long time, and the election results have shown that it will be a key issue now in countries like France and even the U.K., Miller said.

"The fact that the National Front has come to such prominence in France is going to scare foreign investors, who already don't like investing in France because it has such high taxes," Miller said. "This is going to be a hit on the French economy, and for investors, a major consideration."

European Economic Recovery

European Central Bank president Mario Draghi has made it clear that Europe requires further stimulus, a quantitative easing of its own, and investors like Peak are all for this.

"Our viewpoint is that Europe is still in recovery mode – we never thought it would be straightforward and there's definitely a need for stimulation," he said. The hype around the elections, however, has detracted from Europe's economic recovery, Thelin said, and even if the economies affected by the crisis have turned the corner, their recovery is as yet fragile.

"Until now, economic downside did play a role for voters but independence from the EU and this plague of xenophobia that's swept through Europe are taking away from the important issues, including a free trade agreement with the United States, which would benefit Europe immensely," Thelin said.