According to the analysts at Deutsche Bank, with developments in the UK and the US, populism was a key theme in 2016 but by taking a closer look suggests that the perception of a populist surge last year does not quite hold for Europe.
“While populism was an omnipresent theme in public discourse, support for populist parties in polls rather remained stable and elections did not translate into outright populist wins. Rather than “the year of the populist surge” 2016 may be better described as a year when the impact of populists on political systems was increasingly felt.”
“The rise of populist parties has however been a multi-year trend. Greater fractionalization, shrinking majorities, increasing vote shares of radical rightwing parties in particular, and more polarized political disputes have been more common following financial crises in modern democracies. The key issue is that political fragility may hinder reforms and hence economic recovery.”
“Populists can affect national politics in various ways. One possible effect is that forming a government (coalition) often gets more complicated and timeconsuming - resulting in more fragile governments which may foster discontent further. Another is populists’ potential impact on style and content of policy discussions. Pursuing policies which hold long-term benefits but are often not instantly popular becomes more difficult - both at the national and the European level.”
“Populism is clearly a challenge for the EU. In many ways, the EU epitomises what populists oppose, i.e. a system of governance geared towards compromises, with an emphasis on the longer term and based on impersonal rules. At the same time, this is part of what makes “the EU” an easy scapegoat because its model of governance can easily be perceived and be portrayed as (too) slow and (too) complex.”
“Populists’ restrictive approach towards open markets for goods and people both within the EU and from outside is putting the single market at risk. Their reluctance or even refusal of constructive integration policy can cause a stalemate of European integration or might even lead to a winding-up of the institutional framework.”
“The recent Dutch parliamentary elections delivered a clear pro-EU mainstream majority. However, this year’s political calendar remains packed with a number of elections in member states that have wider significance for the EU.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these securities. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Forex involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility.