Combating the Continent's Populist Movements: Shielding the Less Well-Off from the Forces of Transformation

Over a twelve months after the election that delivered Donald Trump a clear-cut comeback victory, the Democratic party has yet to issued its postmortem analysis. However, recently, an prominent progressive lobby group published its own. The Harris campaign, its writers contended, failed to connect with core constituencies because it failed to concentrate enough on addressing basic economic anxieties. By prioritising the menace to democracy that Trumpist populism represented, progressives overlooked the kitchen-table concerns that were foremost in many people’s minds.

A Lesson for Europe

As the EU braces for a turbulent era of politics from now until the end of the decade, that is a lesson that must be fully absorbed in Brussels, Paris and Berlin. The White House, as its newly released national security strategy indicates, is hopeful that “patriotic” parties in Europe will quickly mirror Mr Trump’s success. Within Europe's Franco-German engine room, Marine Le Pen’s National Rally (RN) and Alternative für Deutschland (AfD) top the polls, backed by significant segments of blue-collar voters. Yet among mainstream leaders and parties, it is difficult to see a response that is sufficient to challenging times.

Era-Defining Problems and Costly Solutions

The issues Europe faces are expensive and era-defining. They encompass the war in Ukraine, sustaining the momentum of the green transition, addressing demographic change and building economies that are more resilient to bullying by Mr Trump and China. As per a Brussels-based research institute, the new age of geopolitical insecurity could require an additional €250bn in yearly EU defence spending. A significant study last year on European economic competitiveness called for substantial investment in public goods, to be financed in part by jointly held EU debt.

Such a fiscal paradigm shift would stimulate growth figures that have stagnated for years.

However, at both the EU-wide and national levels, there continues to be a lack of boldness when it comes to revenue raising. The EU’s so-called “budget hawks oppose the idea of shared debt, and EU spending plans for the next seven years are deeply timid. In France, the idea of a tax on the super-rich is overwhelmingly popular with voters. Yet the embattled centrist government – while desperate to cut its budget deficit – refuses to contemplate such a move.

The Cost of Political Paralysis

The reality is that in the absence of such measures, the less affluent will bear the brunt of financial adjustment through austerity budgets and greater inequality. Acrimonious recent conflicts over retirement reforms in both France and Germany highlight a developing struggle over the future of the European social model – a phenomenon that the RN and the AfD have happily exploited to promote a politics of nativist social policy. Ms Le Pen’s party, for example, has opposed moves to raise the retirement age and has stated that it would focus any benefit cuts at foreign residents.

Preventing a Strategic Advantage for Nationalists

In the US, Mr Trump’s pledges to protect working-class interests were deeply disingenuous, as later Medicaid cuts and tax breaks for the wealthy underlined. Yet in the absence of a convincing progressive alternative from the Harris campaign, they worked on the election circuit. Absent a fundamental change in fiscal policy, social contracts across the continent are in danger of being ripped up. Governments must steer clear of giving this political gift to the populist movements already on the march in Europe.