Fragmented post-recession Europe harder to govern

From Portugal to Sweden, European countries are becoming harder to govern, and economic reforms more difficult to implement, as a prolonged financial crisis bequeaths a fragmented political landscape with weaker and more divided governments. The arrival of a wave of refugees and migrants fleeing war, repression and poverty in the Middle East, Asia and Africa may even amplify those political trends, boosting anti-immigration populists and sapping the traditional parties of government.

For the next cycle of European elections, it’s not ‘the economy, stupid’; it’s 'immigration, stupid.’

Tina Fordham, chief global political analyst at U.S. bank Citi, who tracks “vox populi risk” for investors.

In West European elections this year, centre-right parties that have implemented austerity policies have mostly come out on top, with the exception of Greece, but have often been weakened by losing votes and seats. But more recent votes show that economic success is not necessarily rewarded politically. Instead, anxiety about immigration is trumping economics in many European countries as the driver of electoral behavior. The weakness of many European governments will as a rule make it harder for them to win social acceptance for integrating large numbers of refugees, making more clashes with EU partners likely over sharing the financial and human burden and only further miring the region in political and social instability.

Despite a return to economic growth – fragile in some cases – the demand for political alternatives is ever stronger. The key driver is a deficit of trust, not just in governments but in elites more generally.

Tina Fordham

Europe refugee crisis