Investors needn’t fear the rise of Europe’s green parties

Green parties across Europe are finding the centre-right to be natural allies. That will be great for business, says Matthew Lynn.

Leader of Austria’s Green party, Werner Kogler: the greens are flowering

Over the last couple of decades, the green parties have positioned themselves as part of the radical left and the enemies of big business. Most corporate bosses and investors would probably rather see hard-left socialists in power than radical environmentalists. At least socialists are in favour of a productive economy, even if they don’t have much idea how to create one. But maybe that view is out of date.

Austria’s blue-green pact

In Austria, the conservative People’s Party chancellor, Sebastian Kurz, has just formed a coalition with the greens after breaking with his allies on the populist right. In Germany the greens are now the fastest rising political force, overtaking the Social Democrats as the main opposition party. It won’t be long before they replace the SPD in a coalition with the Christian Democrats to take control of Europe’s largest economy. Similar blue-green pacts may soon be formed across Europe. Parties that were once at opposite ends of the spectrum are working together.

Subscribe to MoneyWeek

Become a smarter, better informed investor with MoneyWeek.

Kurz’s move is the most interesting because it maps out the amount of common ground shared by conservative parties and environmentalists. The coalition agreement includes plenty of policies that will keep the greens happy, such as increasing the taxes on air travel, expanding the country’s rail network, a commitment for all of Austria’s electricity to be produced from renewable energy sources by 2030, and targets to make the country completely carbon neutral by 2040. But it also has plenty to keep the conservatives and their business allies happy as well, such as a commitment to cutting both personal and corporate taxes, tighter immigration controls and measures to promote national identity. Haggling out a deal looks to have been surprisingly easy.

In Germany, too, either after the present grand coalition falls apart, or after fresh elections a similar platform might be agreed. Angela Merkel’s CDU has already announced a package of environmental policies costing €60bn. A coalition with the greens would go further, but it wouldn’t exactly be a radical change of direction.

Advertisement - Article continues below

Beyond the fringe

We shouldn’t be that surprised that conservatives and greens can work together. There is no inherent ideological conflict between the two sides. Sure, a few environmentalists think any form of growth is bad in itself, but that is a fringe view and one that is fading as environmental parties move into the mainstream. There is nothing about tackling climate change, controlling pollution, or creating cleaner, healthier living spaces that will trouble anyone on the centre right. And among the more thoughtful greens, there may soon be a growing recognition that market- based solutions to environmental challenges may be more effective than big state-led projects. And that a wealthier economy will be able to afford to protect the environment better than a struggling one.

Indeed, some of the major growth industries of the next decade will be rooted in protecting the environment. Renewable energy is already a big business, and one that is getting more profitable (and competitive with fossil fuels) all the time. The battery industry, which will be vital as we switch to renewable electric power, will be just as big. Electric cars are already turning into the fastest growing sector of the automobile industry. Supermarkets and retailers have already invested heavily in making their operations more ecologically friendly; plastic bags are being phased out, and more and more food is sourced locally.

The greens are a rising political force in every European country. Business and investors might until recently have viewed that with trepidation. But if they can be allied with the centre-right, they could easily win a majority of the votes, and a mix of massive investment in trains, renewable energy, and curbing carbon emissions, along with tax cuts and pro-business competition policy, sounds like a credible combination. Green investment will stimulate demand, and so will tax cuts, while deregulation will encourage entrepreneurship. Businesses and greens can, it turns out, be natural allies.



Global Economy

The MoneyWeek Podcast - Edward Chancellor: governments’ reaction to the virus will come back to haunt us

Merryn Somerset Webb talks to financial historian, investment strategist and author Edward Chancellor, and asks: are we doing the right thing, is it g…
31 Mar 2020
UK Economy

Debt jubilee: will our debts be written off?

The idea of a "debt jubilee" – general society-wide cancellation of debt – goes back to Biblical times. Could it happen again? And would it really do …
28 Mar 2020
Global Economy

The charts that matter: are we there yet?

Markets rallied in a week when the world's central banks unleashed a torrent of newly-printed money. John Stepek looks at what's happened to the chart…
28 Mar 2020

Will coronavirus cause the airline sector to crash?

The government has ruled out a bailout for the airline industry – for now. US carriers appear to be even more vulnerable to the downturn.
26 Mar 2020

Most Popular


Three things matter for the UK housing market now – and “location” isn’t one of them

The UK housing market is frozen. And when it does eventually thaw out, the traditional factors that drive prices will no longer apply. The day of reck…
1 Apr 2020

What does the coronavirus crisis mean for UK house prices?

With the whole country in lockdown, the UK property market is closed for business. John Stepek looks at what that means for UK house prices, housebuil…
27 Mar 2020
Small business

Furlough: what does it mean and how does it affect me?

Many companies have “furloughed” employees after they have shut down because of the coronavirus. But what does furlough mean and how does the scheme w…
30 Mar 2020

Buy stocks for the long term, but buy very carefully

After the wild ride of the last couple of weeks, equities are no longer expensive. But if you do decide to buy, be very, very careful indeed, says Mer…
30 Mar 2020