REPORT
By Gökhan Kurtaran
London letter, March 13

- Rising ultra nationalism clouds Europe’s economic outlook

The EU referendum has been a turning point for not just the U.K. but also for the future of the EU. European leaders may be worried about ultra nationalism and the rise of right wing movements, which could overshadow the political outlook in the short term and determine the direction that the EU is heading. 

The Netherlands will hold elections on Wednesday, March 15, and political rhetoric during the campaign has already shifted to ultra nationalism on the back of the “undiplomatic crisis” with Turkey, the second biggest NATO ally and EU candidate. A total of 28 parties are vying for a chance to form a new Dutch government.  A fragmented political environment shows that a coalition is likely needed. With 150 seats up for grabs in the Dutch parliament, and while 76 are required to form a majority, the incoming government is likely to be made of at least four to six different parties. The front-runners among them include, Geerts Wilders, leader of populist Part of Freedom, who recently gathered momentum among Dutch voters according to recent polls. Considering his ultra nationalist, anti Islamist, anti immigrant rhetoric, this might be set off alarm bells for the rest of Europe and for the future of the EU. Even though Wilders PVV has only 12 seats in the Dutch Parliament, the main concern is that his rhetoric has been influencing the current Prime Minister Mark Rutte from the People's Party for Freedom and Democracy as we have seen at the weekend with the unnecessary and undiplomatic dispute in the hope of consolidating right wing votes.

A new poll of French voter intentions on Saturday showed Emmanuel Macron solidifying his support and that he is still likely to defeat the right wing National Front candidate, Marine Le Pen.

The BVA poll, published 43 days before the April 23 opening round, showed the independent centrist Macron scoring 26 percent, up 2 percentage points from a week earlier and five points in the last 15 days, according to Reuters.

However once again, we should remember the fact that polls for general elections of the U.K. in 2015, the Scottish referendum, the EU referendum and inn the U.S. elections were unsuccessful in correctly predicting the results. Therefore, a more cautious approach is necessary in determining the rise of nationalism across Europe.

Federal elections will be held in Germany on Sept. 24, 2017 to elect members of the Bundestag. Germany's center left Social Democrats (SPD) were up 1 percentage point at 33 percent, level with Chancellor Angela Merkel's conservatives who remained unchanged, an Emnid poll showed just over six months before the federal election. Merkel, running the biggest economy of Europe for more than 11 years, might be replaced with SPD’s new leader Martin Schulz, the former president of the European parliament.

Soon, the results of election cycles in Europe might change the political and economic outlook of the continent while the U.K. is readying for triggering Article 50 to say a final goodbye to the union. However, the risk is that there might be new countries demanding the same, especially if the U.K. prevails in retaining market access and succeeds in eliminating volatility as a result of the Brexit. Undoubtedly, the markets and investors will closely watch the election cycle in Europe, as results will be crucial in determining the destiny and sustainability of the EU.

13 Mar,2017

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