October 20, 2017

News in Charts: Austrian Election Provides Populism Reminder

by Fathom Consulting.

As the days shorten, the promise of the European spring is being replaced by a darker mood in European politics. This year has delivered a series of polls seen as essential to the future of the European Union, and started with promising early signs for Europe’s centre ground. In March, the Liberal party was re-elected in the Netherlands, thwarting the populist Party for Freedom (see Fathom Consulting, ‘Dutch election outcome represents a step away from our risk scenario’). Subsequently in May, Emmanuel Macron’s centrist election campaign overcame the far-right National Front candidate Marine Le Pen (see Fathom Consulting, ‘Labour market reforms top of the agenda for Mr Macron). However, more recent developments have raised political risk levels in Europe, with the extremist AfD claiming over 12% of September’s vote in Germany and its first seats in parliament for over half a century (see Fathom Consulting, ‘Focus on the FDP, not AfD’). In Sunday’s election in Austria, the conservative Austrian People’s Party (ÖVP), led by 31-year-old Sebastian Kurz, gained the highest share of votes after running an anti-immigration campaign. The new government will most likely be a coalition of Kurz’s ӦVP and the far-right Freedom Party (FPÖ), whose most recent inclusion in the Austrian government in 2000 triggered diplomatic sanctions by other EU member states.

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A near-doubling of international migrant levels over the past two decades has driven opposition to immigration in Austria and Germany. Regardless of the final form of the coalition government, Austria will be expected to support stronger migration rules and a common European border protection mechanism. A right-wing coalition in Austria would join Hungary’s Viktor Orbán and Poland’s Law and Justice (PiS) government in demanding Europe pursue tougher policies on borders, refugees and migration.

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Autumn’s election results have thus provided a timely reminder that the risk posed by isolationist parties, who threaten to throw globalisation into reverse, has not yet completely faded. The next big test will be the Italian elections scheduled for the first half of 2018. The populist Five Star Movement, founded in 2009 and supportive of an Italian referendum on euro area membership, is seen as a realistic contender for government according to current polls.

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