Economic Growth

Europe’s voters are lashing out at domestic politics, not the EU

Daniel Gros
Director, Centre for European Policy Studies (CEPS)
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Most post-election commentary has concentrated on the “shocking” surge of anti-establishment, mostly Eurosceptic parties. However, upon closer inspection one sees that the Eurosceptic parties have quite different roots in the periphery of the euro area and the better-off northern part of the European Union. Moreover, what appears as a rejection of the EU is in reality a diffuse disaffection with politics at the national level.

Euroscepticism in the periphery? Here the young generations have been hardest hit by the recession and are voting en masse for left-leaning “anti-austerity” parties, most notably in Greece. These parties do not reject the EU; on the contrary, they want the EU to show more solidarity towards them, allowing their governments to spend more. This type of protest is natural when countries have to adjust consumption downwards after a period of massive overspending.

With the economy in the periphery, these parties (such as Greece’s Left-wing Syriza) should gradually either lose their support or re-enter the mainstream competition of parties that want to make the EU work better. It is also apparent that the anti-austerity protest vote has been strongest where governments have not been able to implement reforms effectively (e.g. Greece). In Italy the new government under Matteo Renzi has been able to stem the tide of Euroscepticism by undertaking concrete reforms and curbing the habit of blaming the country’s problems on the EU.

The rejection of the EU seems more fundamental in the northern area of the EU, where the elderly have voted for more right-wing, nationalistic parities. The motivation is, in many cases (most notably the UK and France), immigration and the perception that the EU is responsible for open borders which allow foreigners to come as welfare tourists or as workers who engage in unfair wage competition.

All available studies show that welfare tourism is a very limited phenomenon and that immigration fosters economic growth. But these facts do not count when wages are stagnating (as in the UK) or unemployment keeps increasing (as in France).

These domestic problems are projected on Brussels, which in this case represents the outside world in general. Moreover, in the UK, a general feeling that “we were never asked” has become common; despite the fact that all changes to the EU treaties were approved by large majorities in the House of Commons. The promise of a referendum, made by Prime Minister David Cameron in response to this feeling, shows that the domestic political system of a parliament as the only expression of the will of the people no longer works.

The EU is caught between the demands of the young in the southern countries for more solidarity and the dissatisfaction over open borders felt by the elderly in the north. But it would be a mistake to try to mollify both by relaxing the fiscal rules and ditching the Schengen system of open borders. The deeper roots of this surge of Eurosceptics and other protest parties lie in a general disaffection with the state of the economy and dysfunctional national political systems. Tinkering with the treaties or the fiscal rules will not make much difference. Reform is needed at home, in national capitals. Brussels can only be as strong as its components.

The key point is thus not who will be the next president of the Commission or European Council, but whether President François Hollande can obtain a national consensus on the need for reform in France and whether David Cameron can convince the electorate that immigrants (only one third of whom come from poorer EU states) make an important contribution to the British economy. This is the only way to win the debate on the EU where it really matters.

Author: Daniel Gros, Director, Centre for European Policy Studies, Belgium

Image: A protester dressed as a prisoner marches through the streets of Paris during a demonstration REUTERS/Christian Hartmann

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Related topics:
Economic GrowthFinancial and Monetary SystemsGeographies in Depth
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