Significant downside risks in Europe from politics

Societe Generale notes the downside risks for Europe as follows:

• Our baseline scenario assumes Greece will not default, the UK will not hold a referendum on EU membership and that none of the key elections on the horizon (Spain and Portugal in 2015, France and Germany in 2017) will deliver majority victories to parties on either the far left or far right. 
  
  
• A notable presence in parliament for any of these parties, however, could make it harder to form stable majority governments and/or drive through required reforms. 
  
  
• We set the probability of an adverse outcome for these baseline assumptions at, respectively, 40%, 25% (just over 10% on actual Brexit) and 5%.