|Source: Goldman Sachs.|
The biggest transition in the current environment is a shift away from the dominant trend of globalism, which brought increased cross-border flows of goods and people. After years of slow economic growth and rising wealth inequality, support for parties with more populist messages—often focused on easier fiscal policy, immigration reform and/or protectionist trade policy—has been rising steadily over the past few years.
Populism claimed two major victories in 2016 with Britain’s decision to leave the European Union and the election of Donald Trump as president of the United States. In 2017, we will be closely monitoring the strength of the populist trend given its potential to impact Europe and the increased likelihood of more protectionist trade policies.
Populism has infused both right- and left-wing parties in Europe over the last few years, largely fueled by Eurosceptic, anti-austerity and anti-immigration sentiment. Populist impact on policy has been limited because mainstream parties remained in power. Now, populist victories in the UK referendum (Brexit), the US election (Trump) and Italy (the defeat of the constitutional referendum) are putting increased focus on 2017 national elections in France (April/May), Germany (September–October) and the Netherlands (March).
The potential for real populist influence at the national level—whether through additional parliament seats, partnership in a coalition government or a national leadership position — will be an important gauge of the strength of the populist movement. It could have implications for broader European policy, the economy and the Eurozone itself (p. 8-9 HERE).