Crises and populism have become synonymous when discussing the European Union (EU). The Netherlands’ Election on March 15th is the first test of the 2017 election season in Europe and a pivotal gauge of populism and confidence in stock markets across the region. The French elections will follow in April and May, along with the German elections in September. The future of the EU and the euro as a currency hinge on these elections, with rising euro-skepticism spreading throughout Western Democracies.
As a forecaster, geopolitics and financial markets are intertwined. The euro is taking a barrage of hits, with questions over the future of the EU entering the market sphere, and increased fear of the Netherlands leaving. Although investor confidence in the structure of the Netherlands proportional voting system is maintaining a degree of stability in the market.
Despite being at the helm of an economic ship that has seen the Netherlands push through a housing market slump, a rise in property prices and a modest growth rate of 1.9 per cent since June 2016, Prime Minister Mark Rutte is under threat from the populist-iconoclast, Geert Wilders. Wilders, head of The Party for Freedom (PVV) flies the Nexit flag, coupled with an anti-immigration stance. Wilders has consistently remarked his intention if elected for the Netherlands to leave the EU, which could result in a cataclysmic wave across Europe.
If a Nexit was to occur, this could be a signal for an exodus of other EU members states. Immigration will play a significant part in the voting patterns of the Netherlands, where approximately 20% of the population are first or second generation immigrants. If Wilders attains a high proportion of the vote in the Netherlands, this could bolster Marie Le Pen’s National Front Party in France.
However Wilders could be restricted by the structure of the democratic system of the Netherlands, which has a proportional voting system, where no party has won an outright majority. Whilst a majority of parties remain distant from forming a coalition with Wilders, the likelihood of Wilders becoming Prime Minister are slim. Yet as 2016 proved through the tumultuous events of Brexit and Trump, don’t underestimate a black swan occurring.
Cracks in the grand liberal project of the European Union are forming, the extent to which these cracks signal the end of the post WWII economic order in Europe could define 2017. The Netherlands Election on March 15th is the first test of a long electoral season in Europe.
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