Populists Causing ‘Fractured Politics’ for EU Vote, Foley Says

(Bloomberg) -- Populist forces are causing “fractured politics” across the European Union ahead of crucial legislative elections in May, adding to growing worries about a slowdown in the bloc’s economy, according to Jane Foley, head of currency strategy at Rabobank.

“There’s lots for investors to be concerned about in terms of politics in Europe,” Foley said in an interview with Bloomberg Television on Wednesday. Across the continent, “we’re talking about fractured politics, perhaps the end of the usual left-right coalitions,” she said.

Populists Causing ‘Fractured Politics’ for EU Vote, Foley Says

A surge in support for populist parties means that the two largest political families in the European Parliament, both traditional mainstream actors, will see their combined share of seats fall below 50 percent, according to the assembly’s projections of the result. The EU-wide ballot is set for May 23-26.

“The markets are quite concerned about populists getting a greater percentage of the vote, worried about what that would do to the European Commission, what that would do about budgets over the next year or so,” Foley said.

The economic outlook only adds to the concerns of market participants, Foley said. The OECD on Wednesday said the global economy is suffering more than expected from trade tensions and political uncertainty that are clouding prospects in Europe in particular.

“You have two predominant concerns, and they’re both really quite major,” Foley said. “The first is economic -- we’ve got a slowdown in growth, in particular of course in Italy where they did enter a technical recession last year,” she said.

“But also you do have the politics overlying that,” Foley said. “And these are both very significant issues.”

©2019 Bloomberg L.P.