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How populists thrive in hard economic times

Research highlights the crucial link between a stable economy and popular trust in democratic institutions

By Elias Papaioannou 28 August 2018


With Brexit and the election of Donald Trump, populism in the West has gained sufficient momentum to shake the complacency of the Anglo-Saxon elites. Trump’s victory and the UK vote to leave the EU were hugely significant events in 2016, followed in 2017 by weighty gains for populist parties in France and Germany. Although Trump, Brexit and Marine Le Pen’s rising credibility are relatively recent phenomena, exploiting a sense of resentment in those who feel ‘left behind’, populist parties across Europe have actually been gaining ground since 2012.

While populism is not, then, a wholly new arrival on the European political scene, there are factors which have boosted its recent popular appeal and legitimacy. Much of it comes down to money: most people have less of it since the global financial crisis (GFC) of 2007-09 – and they are angry.

Data gathered from 220 regions in 26 European countries over 17 years (2000-17) demonstrates a strong link between unemployment and votes for non-mainstream parties, particularly populist ones. Looking at the impact of the GFC, a pattern has emerged linking lack of work, anti-establishment voting and rising distrust of government.

Power to the (parochial) people

Today’s populist surge in Europe differs from the 20th century populism prevalent in Latin America. Often featuring charismatic leaders, the latter championed nationalism and redistribution in the name of ‘the people’ and tended to be associated with the Left.

Recent European populism is a different beast, driven more by a rejection of globalisation and its accompanying integration of trade, immigration and international finance – issues that can feature on the agenda at either end of the political spectrum. In Europe the traditional Left-Right divide has seemingly been replaced by a new phenomenon: a confrontation between the parochial and the cosmopolitan – citizens of somewhere vs citizens of nowhere, as they have been termed. In other words, the metropolitan ruling classes are being challenged by those who feel themselves to be disenfranchised. 

Analysis shows that, in the European periphery, growing unemployment correlates with the emergence of radical left (often populist) parties; while in north, central and Eastern Europe, increased unemployment can push voters more towards nationalistic, populist groupings of the Right.

Automation and cheap goods

The lower-middle classes have been particularly vulnerable to changes in the jobs market brought about by technology and international trade. In the medium term, technological innovation has erased jobs through automation, while cheap imports have reduced the need for local labour. In the relatively short term, unemployment has increased, with the economic instability and insecurity that is one of the lasting legacies of the GFC. Europe may be recovering, but unemployment is declining slowly, particularly in the south.

Take the relationship between unemployment before and after the GFC and voting for political parties outside the mainstream. Examining this in more detail, the parties can be divided roughly into four, not necessarily mutually exclusive, groups: populist, Euro-sceptic, far right and far left. UKIP is an example of a party that is both populist and Euro-sceptic. 

When figures are plotted on a graph, the results are startling. An increase of one percentage point in unemployment is associated with a rise of one percentage point in voting for populist parties. Broadly speaking, in areas where unemployment is highest, so is voting for populist parties.

This pattern is strongest in the south, where the jobless tended to vote far left, but is also seen in eastern and central Europe. Unemployment in the north translates into more votes for far right and populist parties, as in Eastern Europe, where voters are rejecting communism and the far left in favour of parties with an anti-European or xenophobic platform.

The Brexit oracle

No investigation of populism in Europe would be complete without touching on Brexit. The outcome of the 2016 EU referendum is a topic for research in its own right, but it is also interesting as a supplementary study within the regional European research. Brexit analysis demonstrates that rising unemployment figures during the GFC and after were significant predictors of the result. Growing unemployment in the years before the vote was more influential than jobless levels in 2015.

Unemployment erodes trust

How economic insecurity shapes individual attitudes and beliefs throws further light on the effect of unemployment on voting. The European Social Survey covering 2000-14 is useful here, demonstrating how regional unemployment was associated with declining confidence in national and European political institutions.

Unemployment also tended to accompany diminished faith in the courts and judicial systems, although confidence in the police seems unaffected. In general, the link between unemployment and trust is weak or non-existent. However, since rising unemployment is blamed on European and national political establishments, it is no surprise to see that regions with the largest increases in unemployment also have more voters supporting populists in national and European elections. This could also explain the rising populist tone and policies espoused by new parties, and even some existing ones.

Not for me, thanks

Unemployment is not a predictor of how Europeans identify themselves politically on the traditional left-to-right spectrum. In areas of greater economic turmoil, they are more likely to say that no party, even new ones reacting to local developments, represents their views. In general, unemployment fluctuations appear to have little bearing on whether people think EU unification should be halted or allowed to continue, but this probably masks a range of views. Higher unemployment in the south seems to coincide with desire for deeper integration, whereas residents of troubled regions in the north and centre indicate the European project has gone too far. Gender and age make no difference to the results, although those without tertiary education are more likely to distrust both national and European institutions. Previous studies have demonstrated that unskilled workers whose pay has been held down by rising competition from labour in low-to- middle-income countries are more inclined to vote populist.


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Breaking the cycle

The results of this research have wider implications for Europe and its leaders, highlighting the importance of a stable economy in maintaining trust in democratic institutions. The data indicates that increased unemployment leads to decreasing trust in mainstream political institutions, while support for anti-establishment, populist parties rises.

To regain economic stability after the GFC, European governments pursued reforms and austerity policies that seemed necessary but are often unpopular. Successful reform requires trust that sacrifices in the present will lead to long-term gains for all, not just the one per cent. Without trust, reform is difficult to implement, unemployment stays high and a vicious cycle of diminishing returns becomes entrenched. A concurrent surge of distrust in the courts also rings alarm bells because, without respect for legal institutions, Western democracy flounders.

The momentum of the current European economic recovery is an opportunity to break the cycle of unemployment and distrust that leads to the support of populism. This is an opportunity that should not be wasted.

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