The elections for the European Parliament will be held in a few months’ time. It is expected that interest in Malta will be more focused on the local election, but from the way our electoral system works, one would expect that all six Maltese MEPs will be from among the candidates presented by either the Labour Party or the Nationalist Party. It is not expected that a candidate from another party or political grouping to be elected.
In most other EU member states, the situation will be different. The so-called populist parties are expected to make great gains, and in some countries, they may even finish first. There is the prospect that the centre, centre-right, and right-wing parties will be able to form a majority. One needs to make the point that, rightly or wrongly, populist parties are very often labelled as right-wing, if not extreme right-wing, parties.
This wave has been long coming and we need to appreciate that the basis of it is economic, and the consequences of the gains by the right-wing populist parties will be economic.
The first element to consider is that populist right-wing parties have gained popularity because they appeal to a voter base that has felt it has been treated unfairly by their national government ever since the 2007 international financial crisis.
Governments had tended to provide bailouts to financial institutions by using public funds. As a result, they had to implement an austere fiscal policy to be able to pay for these bailouts. In quite crude terms, the culprits who caused that crisis were bailed out by the taxpayers, who were not guilty of anything.
This time we need to attach more importance to the elections of the European Parliament, as they may shape our economic future significantly
The situation did not improve much with the coronavirus pandemic. Governments have had to spend significant amounts to mitigate the negative impact of the pandemic. However, the ones that emerged best from this crisis were big businesses.
I have already pointed out in previous contributions that multinational companies have hiked up prices far above the rise in their costs, thereby causing a further negative impact on the cost of living.
Profiteering has played a significant role in boosting inflation, as a relatively small number of firms have pushed through above-average price increases, leading to what has been termed as “greedflation”.
In several countries, real wages have been flat for several years. As a result, income inequality across the EU has increased, and the EU and the traditional parties have been blamed for this state of affairs.
Populist parties tend to be anti-EU. As such, one would expect a drive away from economic integration. Multilateral trade, harmonisation of fiscal policy and other economic objectives (irrespective of whether they are right or wrong, as I do not wish to express a value judgement) will be at great risk.
If Donald Trump wins the US presidential election, this drive will become a tsunami.
Moreover, any fiscal prudence that has been adopted in the last years will be destined to be abandoned. The euro may come under severe pressure and the monetary union could become a thing of the past.
While all countries tend to give more importance to their national elections, this time we need to attach more importance to the elections of the European Parliament, as they may shape our economic future significantly.