The rise of anti-establishment parties could end up threatening Europe’s financial security, according to the European Central Bank (ECB).
The euro zone’s central bank lays out the stark warning in its latest Financial Stability Review, which it releases twice a year. The report follows Austria’s presidential election at the weekend, where Norbert Hofer—the anti-immigrant far-right Freedom Party candidate—was narrowly defeated. (He lost by just by just 0.6 percentage points).
And it’s not just Austria that has seen a surge in anti-establishment parties: right-wing populist parties have been on the rise in Germany, France, and Denmark in the last few years, with the anti-Islamic far-right joining the mainstream. While in Greece and Spain, it’s leftwing, anti-establishment and anti-austerity parties like Syriza and Podemos that’s gotten a significant boost in support.
The rise of Europe’s populist, anti-establishment parties—especially on the right—is less of a blip and more of a growing trend. The recent refugee crisis, where a record number of people fleeing war and persecution landed in Europe, is likely to exacerbate this trend.
The ECB warned “political risks have increased considerably in almost all euro area countries in recent years,” which threaten to undermine much-needed fiscal and structural reforms needed to promote growth. This political uncertainty could “potentially contribute to contagion and re-fragmentation in the euro area,” the ECB added.
The report comes a month before Britain’s referendum on its membership within the European Union. Some fear the vote would set off a domino effect across the Europe, where nearly half of voters in eight big European nations think their country should hold a referendum on EU membership.