Francois Hollande's victory in the first round of the French presidential elections and the collapse of the Dutch government have made investors in Europe jittery.
Steven Major, global head of fixed income research at HSBC, told the Today programmes Evan Davis that "investors are taking protection and fear the worst case scenario."
He explained that the friction between Holland and Germany is "right at the heart of the core of the eurozone".
"It's the uncertainty that the markets don't like," he said, adding that the situation is "further complicated by the fact that there isn't the flexibility on policy" in the eurozone.
"In the absence of austerity it is difficult to see what the governments can do because they do not have autonomy over monetary policy," he continued.
"A credible fiscal policy is the only way forward," he said.
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