Recent elections in Ireland, Spain, and Portugal signal growing populist, antiausterity sentiments across Europe. The rise of these outside movements — Sinn Féin in Ireland, Podemos in Spain, and a Socialist-led coalition government in Portugal — reflects growing frustration by a portion of the electorate with the political establishment over immigration, the economy, and high unemployment rates.
New right-wing parties in Ireland are picking up clear signals of popular malaise and are riding on the public’s growing dissatisfaction with mainstream politics. These parties have gained notable consensus by strongly opposing the ruling administration’s harsh austerity measures.
February parliamentary elections in the country saw none of the mainstream parties win an outright majority in the Dáil Eireann, the 158-seat Irish parliament. Sinn Féin, the former political wing of the IRA in Northern Ireland, secured 23 seats, and the Anti-Austerity Alliance-People Before Profit won six seats.
Neither mainstream political party in Spain — the ruling Popular Party (PP) and the opposition Spanish Socialist Workers Party, or Partido Socialista Obrero Español (PSOE) — won an outright majority in Congress in the country’s December general elections.
Following intense negotiations between Spain’s left-wing parties to form a stable coalition government, in late February the Socialists and center-right party Ciudadanos signed a deal backing left-wing leader Pedro Sánchez‘s bid to be prime minister. However, Sánchez failed to gain enough votes to win outright. If no government is formed within two months — the most likely scenario — then fresh elections will be called.
In Portugal, after weeks of difficult negotiations, the leader of the Socialist Party, Antonio Costa, formed a shaky minority government with the backing of the Communist Party and the Left Bloc.
With a populistic undertone, Costa claimed that his priorities will be to temper austerity with a view to boosting the domestic economy. Some of the policies that Costa has set out for the near term include raising the minimum wage, lifting a freeze on pensions, and reversing pay cuts for civil servants.
Despite good intentions, the political parties that back Costa’s government possess ideological differences, particularly on the role of the European Union and on Portugal’s eurozone membership. In this light, the political alliance may be more fragile than originally anticipated, jeopardizing the government’s stability.
Antiestablishment Sentiments Gain Popularity
Regardless of the economic situation among different countries, anti-EU parties have gained popularity across Europe. As these growing political forces encourage widespread distrust of the EU’s institutions, the much-needed movement towards closer European integration and coordination is under increasing threat.
Austerity and its by-products, higher unemployment and poverty levels, are not the only factors behind rising populism, which is spreading in regions beyond Europe, as Donald Trump’s growing popularity in the US shows. Besides being close to full employment, the North American economy has been growing by an average of about 2% year over year since 2011, and we expect growth to accelerate to 2.7% in 2016 and to 2.9% in 2017.
Despite growing economic vitality in the US, Trump has been doing surprisingly well in his campaign for president. Trump’s populism is a combination of economic nationalism that supports protectionism and anti-immigration sentiments, like his call for a temporary ban on Muslims entering the US.
The rise of antiestablishment sentiments is not new. “Politics is about alternatives and the populists are formulating the alternative,” said Ulrike Guerot, a political scientist with the Open Society Initiative for Europe in Berlin. But when populists formulate alternative parties that strongly oppose the idea of a liberal and integrated Europe, this can hinder the free movement of people, capital, goods, and services, and economies will suffer as a result.
Daniele Fraietta has been a D&B economist for more than two years. He currently covers some Western European countries, notably Italy, Greece, Spain and Ireland. For D&B, Daniele has also developed the new econometric framework for commodity prices and exchange rates forecasting. He has an MSc in Economics from the University of Rome Tor Vergata, a Master in Business Administration from The Polytechnic University of Milan, and a Master in International Business from the Chapman College of Business.