The populist revolt is far from over in Europe

A new problem has cropped up in eastern Europe – a pro-Russia billionaire named Andrej Babis.

868-Catalonia-634

In Catalonia, the rallies continue

The crisis in Spain over Catalonia's threatened secession is just "the latest expression of a developing, Europe-wide crisis of political legitimacy", says The Observer. A new problem has cropped up in eastern Europe. A pro-Russia billionaire deemed the Czech version of Donald Trump leads the largest party after last week's national elections. Andrej Babis is opposed to EU migration policies and may now form a coalition with another populist group, the Freedom and Democracy party, which has said it wants to quit the EU.

"This is an earthquake a total revolt against the established parties," Milan Nic of the German Council on Foreign Relations told The Times. It will also bolster the campaign by Poland, Slovakia and Hungary to form a united front against Brussels.

Austria's new chancellor, Sebastian Kurz, is also talking tough on immigration and more sympathetic to this grouping than his predecessor. To what extent political ructions in eastern Europe will hamper regional economies is hard to gauge, but they certainly come at an awkward time.

The region is enjoying its fastest growth in six years on the back of the eurozone's economic revival. According to Capital Economics, emerging Europe (including Russia and Turkey) will expand by 3.5% this year, but dwindling spare capacity in the heavyweight economies of central Europe notably Poland, Hungary, and the Czech Republic indicates higher interest rates, tempering overall growth.

The region's GDP growth will slip below 3% next year. Bulls point to cheaper valuations and higher dividends than in developed markets, while the regional index is still 40% off its pre-crisis peak, implying ample catch-up potential. But peaking growth and increasingly fraught politics may prove strong headwinds.

Recommended

Warsaw and Stockholm: the unexpected new threats to the City of London
UK stockmarkets

Warsaw and Stockholm: the unexpected new threats to the City of London

London has seen off challenges from Frankfurt and Paris, but two other booming financial centres are a bigger threat, says Matthew Lynn.
19 Sep 2021
The charts that matter: more pain for goldbugs
Economy

The charts that matter: more pain for goldbugs

Gold investors saw more disappointment this week as the yellow metal took a tumble. Here’s what’s happened to the charts that matter most to the globa…
18 Sep 2021
With the right political will, inflation can be defeated
Inflation

With the right political will, inflation can be defeated

Governments and central banks can easily control inflation, says Merryn Somerset Webb – they just need the will.
17 Sep 2021
Why are energy prices going up so much?
Energy

Why are energy prices going up so much?

UK energy prices are going through the roof, with electricity the most expensive in Europe and gas at its highest for 13 years. Saloni Sardana explain…
16 Sep 2021

Most Popular

The times may be changing, but don’t change how you invest
Small cap stocks

The times may be changing, but don’t change how you invest

We are living in strange times. But the basics of investing remain the same: buy fairly-priced stocks that can provide an income. And there are few be…
13 Sep 2021
Two shipping funds to buy for steady income
Investment trusts

Two shipping funds to buy for steady income

Returns from owning ships are volatile, but these two investment trusts are trying to make the sector less risky.
7 Sep 2021
How to stop recurring subscriptions becoming a drain on your money
Personal finance

How to stop recurring subscriptions becoming a drain on your money

Tracking and pruning subscriptions isn’t as easy as it sounds. Here's how to take charge.
14 Sep 2021