Elezioni europee 2024

Europe: Is the Far Right Overwhelming? How the Crisis Can Only Get Worse

The Rise of Far Right in Europe and Its Economic Consequences

Is the wave of far-right about to disrupt Europe? It seems so.
And the effects on the ongoing economic crisis will be clear (and worsen the current situation, according to experts’ warnings).

The Far Right Wave in European Politics

With 400 million Europeans set to elect 720 Members of the European Parliament in June, polls predict significant victories for right-wing populists.
Consequently, for the first time since the direct election of the European Parliament in 1979, a solid right-wing majority is expected, marking a “sharp shift to the right” for Europe, as recently noted by the European Council on Foreign Relations (ECFR).

Gordon Brown, former British Labour Prime Minister, explained in his analysis published in The Guardian that ultranationalist and populist right-wing demagogues are leading the polls in countries like Italy, the Netherlands, France, Austria, Hungary, and Slovakia, and are in second place in Germany and Sweden.
There are two far-right groups in the European Parliament: Identity and Democracy, and European Conservatives and Reformists.
Together, they could secure up to 25% of the votes in June.

Economic Implications of the Political Shift

The rise of far-right, nationalist, and populist movements in several countries is a cause for concern, not only politically but also economically.
The EU is showing signs of weaker growth compared to the resilience and strength of the United States.
This aspect is crucial in the political analysis, especially considering the long-awaited recovery after the double shock of the pandemic and energy crisis, which left deep marks on Europe, notably with the German recession.

According to Gordon Brown, in almost every part of Europe, including the UK, the most extreme factions of the right-wing are pushing mainstream center-right parties towards increasingly rigid anti-immigration, anti-trade, and anti-energy transition positions.
This shift implies fewer investments and reforms towards cooperation, openness, and green policies.

Extremism, Pessimism, Zero Growth: Risks for Europe

In the largest Western European countries, many people are pessimistic about their future prospects, believing that their generation will fare worse than their parents’.
This pessimism creates a vicious cycle as blaming others leads to more pessimism.

As people become convinced that their economy is so weak that they can only improve their situation at the expense of someone else, they tend to vote for parties targeting those they believe are holding them back: immigrants, foreigners, and minorities.
These parties offer no long-term economic policies for growth, exacerbating downward economic trends.

Europe Stuck in the Crisis Trap?

The challenge Europe faces now is that the measures it must take to escape this vicious cycle — new investments in technology, clean energy, and medical progress — are hindered by its fiscal restraint policy, added Brown.

The European Growth and Stability Pact excludes member states with deficits exceeding 3% from raising investments.
Additionally, Germany’s debt brake limits the government’s structural deficit to 0.35% of GDP.
This casts a shadow over Europe, with severe public spending reductions in Germany affecting its ability to intervene in outdated infrastructure and impeding its transition to IT-based industries, artificial intelligence, and environmental sustainability.

While China can heavily subsidize and outcompete Europe in electric cars, batteries, and new technologies, and Bidenomics is driving huge deficits stimulating the economy, Europe is constrained by fiscal constraints.

The European Recovery and Resilience Mechanism will end in 2026 with no replacement.
The stability and growth pact, which suspended restrictive conditions during the Covid crisis, will resume its strict regime next year.
France and 11 other European countries are already struggling, unable to invest more because of presumably unsustainable deficits.

Wrapping Up

Therefore, just when increased investments are needed, they are likely to decrease.
And the results of the European elections are unlikely to improve the situation.
Essential green investments will fall off the agenda as anti-environmentalist parties take over.
Protectionism will rise with trade wars, hitting Europe harder than elsewhere.
Unless something gives, a low-growth Europe will remain stuck in its routine — and xenophobic populists will triumph.

These reflections by Brown shed light on the economic development of Europe, emphasizing the crucial role of political and ideological choices, in the most positive sense, and the fundamental right to vote exercised by citizens.

Author: Hermes A.I.

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