What's behind the rise of populism in Europe?

published 16 February 2019

934_MW_P12_Briefing — France's gilets jaunes have shaken Europe

Populism on the left and the right is on the march in Europe, and the establishment looksvulnerable in May's elections to the European Parliament. What happens next?

What's happened?

Every day more evidence emerges that the European economy is grinding to a halt. Italy is officially in recession, having shrunk in the last two successive quarters. France grew a paltry 0.3% in each quarter. Germany shrank in the third quarter,and economists expect it to have grown only slightly (if at all) in the fourth.

In many countries, unemployment remains stubbornly high, and the spectre of another Italian debt crisis continues to loom over the euro. Weekly gilets jaunes protests across France have shaken confidence in that great hope of the European establishment, Emmanuel Macron. All this comes just before elections to the European Parliament (EP) in May reigniting fears among mainstream politicians of a renewed "populist" backlash.

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What is "populism" exactly?

It encompasses political approaches that claim to represent "the people", in contrast to supposedly corrupt "elites" who have let them down. A hallmark is peddling simplistic solutions (which have often been tried and found wanting before) to complicated problems: untrammelled government spending, nationalisation, price controls, and immigrant-bashing are common ploys. Populism thus encompasses parties, people and policies ranging from Jeremy Corbyn's cryptosocialism and Donald Trump's protectionism to Ukip's hostility to foreigners. Populism speaks the language of silent majorities, rigged systems, and the restoration of past glories.

Who are the main European players?

On the continent, there are many groupings of the nativist, far-right and/or anti-EU variety: the Front National in France, AfD in Germany, Fidesz in Hungary, the Sweden Democrats, the Freedom parties in the Netherlands and Austria as well as Ukip here. In Latin America, by contrast which has a long history of populist politics populist leaders have been mainly on the left (like Mexico's new president, Lpez-Obrador, a long-time friend of Jeremy Corbyn).

In Italy, the hard-right populist League (formerly the Northern League) has become a party of government based on what its leader Matteo Salvini calls "the confrontation of the people versus the elite" focused on the issue of immigration. But it sits in coalition with the Five Star Movement, a populist party with a far more amorphous "anti-corruption" programme. Elsewhere in southern Europe the most successful political upstarts are on the left Syriza in Greece and Podemos in Spain.

Why are they becoming more prominent?

Growing support for populist parties is generally held to be the result of the dislocations of contemporary globalisation rapid industrial change, mass migrations, shifting social values and a declining sense of community and solidarity and the fact that those dislocations have hit the bulk of "the people" harder than they hit the elites. Over the past ten years we've had a global financial crisis, the near-collapse of the eurozone, and years of austerity capped by the refugee crisis. Given all that, the rise of populist parties across Europe isn't hard to understand. Nor is populism a solely European phenomenon. Five of the world's largest democracies now have populist leaders the others being Mexico, the Philippines, India and the United States.

How popular are populist parties?

According to a recent study by Harvard academic Yascha Mounk, the populist vote in EU states was, on average, 8.5% in 2000 and had tripled by 2017 to 24.1%. As a result, populists are no longer automatically shunned by the democratic mainstream, and in many countries have entered coalitions, or seen their ideas co-opted and copied. In terms of the EP, right-wing populists already control about 20% of seats a proportion that current polls suggest may rise to about 25% in May. But even if that's all they gain in seat terms, it may be enough to deliver a significant breakthrough giving right-wing populist parties the opportunity to forge, for the first time, a serious rival to the dominant centre-right (European People's Party) and centre-left (Socialists and Democrats) blocs.

What will this mean for the EU?

It's worth bearing in mind that the EP is just one of the main decision-making bodies of the EU, the other being the Council of Ministers, which represents national governments. The latter will be able to dampen, if not pre-empt, many populist initiatives from a new bloc of parties in the EP. So a revolution is hardly in the offing. But the rising populist tide may prove pivotal for the euro.

How so?

Because while Europe's populists are a ragbag, they tend to agree that governments need to spend moremoney. The fiscal discipline underpinningthe single currency thus looks increasingly susceptible to political attack. Near-term, this implies a stand-off betweenthe spendthrift southern states andthe restrained, German-dominated northern states.

That would undermine investors' confidence further, but this could ultimately end happily: the northern states, bar Germany, agree to a more fiscally expansionist consensus as their populations are tired of austerity too. The southern bloc thus gains control of the euro. Germany will either accede to this (it has benefited from the euro being a softer currency than the deutschmark, after all), or leaves in a huff (the most painless way for Europe to resolve the conflict between differing approaches to managing the single currency, as we've often pointed out). Europe gets a weak currency to bolster its exports, and the populist wave will have furthered the cause of European unity rather than damaged it irrevocably.

Simon Wilson’s first career was in book publishing, as an economics editor at Routledge, and as a publisher of non-fiction at Random House, specialising in popular business and management books. While there, he published Customers.com, a bestselling classic of the early days of e-commerce, and The Money or Your Life: Reuniting Work and Joy, an inspirational book that helped inspire its publisher towards a post-corporate, portfolio life.

Since 2001, he has been a writer for MoneyWeek, a financial copywriter, and a long-time contributing editor at The Week. Simon also works as an actor and corporate trainer; current and past clients include investment banks, the Bank of England, the UK government, several Magic Circle law firms and all of the Big Four accountancy firms. He has a degree in languages (German and Spanish) and social and political sciences from the University of Cambridge.