Rising populist trend poses danger for European economy

As the populist trend across Europe is rising and bringing different threats with it, the rise could have a negative effect on the economy of the eurozone and could lead to a financial crisis, according to experts



Foreign experts have recently stated that the rising populist trend in Europe poses an imminent danger for the European Union and the eurozone, and suggested that this could lead to a financial crisis in Europe.Peter Vanden Houte, chief eurozone economist at ING, told Anadolu Agency that anti-immigration and anti-free trade views are more common in countries where populist parties are more settled. Pointing out that it is difficult to solve the problem of asylum seekers and to predict the effect of this issue on the economy in countries with populist discourses, Houte noted that limiting free trade could have a negative effect on European economies. Houte explained that potential commercial barriers could cause retaliation from Europe's business partners.Anticipating that preventing competition with trade barriers will adversely affect productivity and growth, Houte stressed that the greatest danger in the populist approach is the threat towards the EU and the eurozone. He noted that anti-EU and eurozone groups in countries such as Italy, Spain and the Netherlands are not currently the majority. Underlining that it is dangerous for the populist parties to create hostile attitudes towards factors that have been beneficial to the European economy, such as globalization and integration, Houte stated that if major European countries such as Italy and France decide to leave the eurozone, it could cause a financial crisis in Europe.Brian Lawson, Senior Consultant at IHS Markit, stated that if the radical political groups have the power to change politics, then the economic risks that would be caused by the uncertainties in the business world and the decrease in investment appetite will increase. Lawson indicated that political movements differ from country to country, so the effects may be different in line with the attitudes of the said parties. Recalling that there has been no change in the policies of the Netherlands, Lawson stressed that France is in a vulnerable position. Lawson pointed out that the National Front won the first round in France, but there is no chance of a second-round victory, adding that very little change is expected in Germany's policies.Florian Hense, a European economist at Berenberg, stated that the populists had simple answers for complicated questions, stating that they are not seeking solutions to the problems, but are causing worse situations with their policies. Pointing out that the populists create pressure on the environment of trust, investment and private consumption with political uncertainty, Hense said if the populist groups come to power in countries such as Germany, France and Italy, it could mean the end of the EU and the eurozone. Hense also predicted that Marine Le Pen, France's National Front leader, will not be able to win, and that Italy will not leave the eurozone.