Economic trends

Trump, Brexit and European politics

Following Donald Trump’s surprise victory, which other countries in the West could see a populist regime change?

The economic hardship, political dissatisfaction and concern over immigration that may have contributed to Donald Trump’s victory in the US is also present in Europe. Now, anti-establishment parties are taking their cues from the Brexit result and Trump’s win.

At this stage, no poll points to a clear victory for anti-establishment parties in upcoming votes in Italy, Austria, the Netherlands, France and Germany. However, investors are understandably cautious about trusting opinion polls.

In figures 1 and 2 we sense-check the likelihood and possible consequences of an upset to the expected outcome. Italy’s result could be disruptive. Austria’s could be a shock. The stakes are highest in France’s case, but we see low probability of a surprise outcome.

Trump, Brexit and European politics Figure 1

Why Marie Le Pen is unlikely to be France’s next president

If we assume 80 per cent turnout for France’s presidential election in 2017, a conservative scenario compared with historical figures, and that the National Front party (FN) gains 30 per cent in the first round of voting (current polls indicate 25-30 per cent), about 11 million people would vote FN.

To win the 2017 presidential elections in the second-round run-off, the FN would need around 19 million votes, which means anti-European Union leader Marine Le Pen would need to secure almost three times more votes than the FN’s record 6.8 million votes last year. This constitutes much more than a few swing voters: it would mean the transfer of close to all votes from smaller parties, whether from the hard-left, communist, moderate-left, centre-right, Greens and, in addition, some votes from both mainstream right and left-wing supporters.

Trump, Brexit and European politics Figure 2

 

Even if turnout plummeted to 70 per cent (as it did in 1969, a very unusual election following the resignation of Charles de Gaulle), all other things being equal, it would be a tough victory to pull off. The FN would have to add 5 million votes – an additional 75 per cent versus its previous record of 6.8 million – to win the presidency. A scenario that we think is unlikely.

 

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