City thinking, local knowledge

Is the Political Map of Europe going to be Redrawn?

By Questa Chartered

In the first week of May an open letter was published in France. Signed by 130,000 members of the public and published in a right wing magazine, it accused the French government of granting “concessions” to Islam. “It is about the survival of our country” said the text, believed to have originated in the military.

It followed a similar letter in April, written by retired and semi-retired generals. While the French government condemned the letters, they were supported by Marine le Pen, the right wing candidate in the last French Presidential election.

So far, so predictable. What wasn’t predictable was the intervention of Michel Barnier – famously the EU’s chief Brexit negotiator – who has said that France should suspend all immigration from outside the EU for five years.

Was Barnier reflecting public opinion? Or was he, rather more cynically, paving the way for a bid to become French President? The next election is due to be held in April next year: at the moment Le Pen is fractionally ahead of Macron in the polls and may well beat him in the first ballot – although it is widely expected that Macron would win in the second ballot, albeit with a narrower majority than he obtained in 2017.

Clearly immigration – and the perceived threat it poses – is going to be a big issue in those elections. Does Barnier’s intervention suggest that France is moving sharply to the right?

Across the border, it could be that Germany is set to move equally sharply to the left. Elections in Germany take place at the end of September, with Angela Merkel due to stand down as Chancellor, a role she has held since 2005. At the moment it looks like the Christian Democrat candidate to replace her will be Armin Laschet, currently head of North Rhine Westphalia and leader of the CDU since Merkel stepped down in January.

Right now, though, it is the Greens who are leading in the polls, pledging to spend €500bn (£435bn) on a “socioecological transformation” of the economy, which would see increased welfare payments and wealth taxes, a doubling of carbon taxes, a ban on short-haul flights and increased income taxes – plus a 30 hour working week and the right to work from home. It is a programme that has been dubbed “more tax, less work” by critics.

The Green candidate to replace Angela Merkel would be Annalena Baerbock. Aged just 40, Baerbock will be a sharp contrast to Laschet, who is 20 years her senior and seems very much a politician from the old Germany.

Meanwhile on the opposite end of the political spectrum the Alternative fur Deutschland (AfD) appears close to embracing “Dexit.” Like the right wing in France the AfD has strong views on immigration, and has said that it now considers Germany’s withdrawal from the EU to be “necessary.”

The French and German economies are, of course, the two biggest economies in the Eurozone, with the German economy frequently dubbed the engine of European growth. In the short-term possible political upheavals are not likely to impact the two countries’ economies: longer term fundamental changes – and their consequent cost, especially if the Greens win – must have an impact.

With savings and investments in European markets common, we will be paying close attention to these economic developments.

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