So, the EU has woken up to another referendum defeat for a sitting Prime Minister with Italian voters rejecting plans to modernise the country’s constitution writes Tim McNamara. The markets normally never like uncertainty but with the result widely expected its impact has been less than the financial tsunami that some had predicted. Whilst Renzi’s resignation may cause some headaches across the EU, it is principally a domestic story for Italy rather than a victory against Brussels. Was Trump’s election the apogee of populism globally?
A storm in an espresso cup – Italy
When he came to power just under three years ago, Matteo Renzi was lauded as the newcomer to Italian politics ready to take on the status quo after the downfall of Berlusconi. Fast forward to the referendum and Renzi was portrayed very much as the establishment.
Whilst there have been some lurid headlines about the state of Italian politics and the impact on the referendum result on the EU, and the (supposed) viability of the Eurozone, this was primarily a domestic vote. There is a myriad of reasons why Renzi lost the election, many of which had nothing to do with the EU or the euro. Firstly, Renzi had turned the referendum into a vote of confidence by announcing he would resign if he lost the ballot.
Perversely, this was a vote for the status quo in a referendum that Renzi had turned into a vote of confidence. However, with his resignation, at 41, he ensures that he has a future in Italian politics.
Secondly, there was a populist front opposing Renzi (Lega Nord and the 5star movement) allied to Berlusconi’s Forza iIalia, as well as opposition from five previous Prime Ministers, including the very pro-EU Mario Monte (Former European Commissioner).
This, in no way was a majority vote against the EU or the eurozone. There is no palpable appetite for the return of the Lira. Although, 5star retained a significant degree of support and are players in a future general election. Berlusconi’s party can take little solace in being outshone by others.
Despite smelling blood, the ‘No’ side will not try to unseat the Democratic Party (Renzi’s) as the governing party. None of the major opposition parties are in a position to launch a general election campaign. Like three wrestlers in the same ring, they are nervously keeping an eye on each other. Furthermore, constitutional changes recently enacted have only partly changed the inter-relationship of Italy’s bicameral system and further changes will be necessary before an election can be held.
In regards to the economy, nothing changes – the banks still have the same problems and the economy is still stagnating. These are issues that still need to be addressed.
Brexit wins the day? – Austria
Although the Austrian presidential election was seen to be totemic, the resulting defeat of the far-right should not come as a surprise. Many on the right tried to establish the narrative that post-Trump’s election populism was on an inexorable march. Yet it is clear that the UK referendum on Brexit had an impact. Most opinion polls across the EU post-Brexit saw a significant rise in support of the EU. Austria was no different.
The far-right’s defeat is also indicative of the 2016 refugee crisis that had dominated the previous poll is now less salient. Austria was mainly impacted as a transit country to Germany and local difficulties had resolved themselves. The FPO (Freedomites) have fared well in the past and their waves of success owe a lot to the common perception that the two main parties (CDU and SPD) are a cosy duopoly with a high degree of clientism.
A right-turn but not too sharp – France
Francois Fillon’s win the centre-right primary to pick its Presidential candidate changes everything in France. Marine Le Pen had been quick to laud Donald Trump’s victory in the United States and her National Front party was widely regarded as having momentum, at least to get through to the second round of voting next April. Fillon’s liberal economics and profound Catholicism marks a huge challenge for Le Pen as far as the Presidential election is concerned.
There is a risk to Le Pen that Fillon may sweep up so many votes on the right that she might not even reach the second round in the Presidential contest. Now that President Hollande has confirmed that he will not seek a second term, the question becomes whether the French left can pick a new face in its January primary to get back in the game. It’s a long shot, but there could be some surprises left in the French election.
Steady as she goes – Germany
It’s simple to say, as things stand, Merkel is hands-on favourite to remain as Chancellor in the German election next autumn. Despite some poor regional results, Merkel’s personal level of support runs at 70 per cent, although her party may have to continue in coalition with the centre-left SPD. The populist anti-immigrant party Alternative fur Deutschland (AfD) is struggling to gain traction on the right of German politics but will win representation in the Bundestag.
A bridge too far – Netherlands
The Netherlands, often an ally of the UK in EU debates, holds elections next year. The populist Party for Freedom (PVV) led by Gert Wilder is currently leading the polls with around 30 per cent. Despite record levels of support, this will be insufficient to secure a role in government due to the proportional nature of the Dutch voting system. His naked anti-immigrant and anti-Islam rhetoric sees him as being beyond the pale as a coalition party by any of the mainstream parties.
