PeterSiks image 1142x160

The rise of populism: Far-right parties will influence the future

Quarterly Outlook
peter-siks
Peter Siks

Summary:  Across Europe, there’s been a surge of populist far-right parties, raising concerns about the economic consequences of their policies. While the motivations behind this shift are complex, a combination of economic anxiety, cultural concerns, and political dissatisfaction have fuelled their rise.


The drivers behind the rise of recent populist politics

The economic effects of globalisation and neoliberal policies have left many Europeans feeling insecure about their future. Between job losses, industrial decline, and a widening gap between rich and poor, populist parties have capitalised on this collective anxiety by offering simplistic solutions to complex economic challenges. They appeal to those left behind by the tides of change by promising to protect jobs, restore national sovereignty, and address economic inequality.

Concerns about immigration, cultural change, and the erosion of national identity play a significant role in the rise of populism. Populist parties have exploited these themes via nationalist rhetoric, scapegoating immigrants, and advocating for stricter immigration controls. They capitalise on fear by portraying themselves as defenders of traditional values.

Traditional centre parties have often been perceived as out of touch with the concerns of ordinary citizens and failing to address their problems. This has created a vacuum that populist parties have filled. By presenting themselves as “anti-establishment” they’ve attracted disillusioned voters.

Economic policy impact from far-right parties 

Despite their diverse origins, populist, far-right parties share several common characteristics in their economic policies. They often advocate for protectionist measures, such as tariffs and quotas, to shield domestic industries from foreign competition. They believe that protecting domestic jobs and businesses is essential for economic security. 

They prioritise the interests of native citizens over those of immigrants. This can manifest in policies that restrict immigration, limit welfare benefits for non-citizens, and favour native-born workers for employment opportunities. 

Both far-left and far-right populist parties often view the EU as an undemocratic force that undermines national sovereignty and imposes unwanted economic policies. Some even advocate for leaving the EU, believing that regaining control of economic affairs is essential for national prosperity. 

Far-right parties hold a sceptical stance towards climate change and oppose ambitious climate policies. They frame it as a threat to national sovereignty and economic competitiveness, and argue that climate action will disproportionately burden ordinary citizens.

The economic consequences of populist far-right policies are complex and uncertain. While some policies may provide short-term benefits for specific sectors or groups, they also carry long-term costs and consequences.

Protectionist measures can hinder international trade and discourage foreign investment, potentially slowing economic growth and reducing consumer choice. Trade barriers, for instance, can lead to increased costs and potentially dampen economic activity. Populist parties often promise to increase social welfare spending and reduce taxes, which leads to larger fiscal deficits which raise borrowing costs, lowers private investment, and increases the risk of economic instability. 

Populist rhetoric and policies can contribute to political instability, deterring investment and undermining investor confidence. Political uncertainty makes long-term economic planning difficult for businesses, hindering economic growth.

Sectors impacted by populist politics

Populist parties often propose protectionist measures, such as tariffs and quotas. These policies may be beneficial in the short term, but can lead to higher consumer prices, less choice, and decreased productivity overall. 

They may advocate for increased government intervention in the healthcare sector, such as price controls. While these policies aim to make healthcare more affordable, they can also stifle innovation, and reduce access to new treatments.

Populist right-wing parties may propose the nationalisation of energy resources, or stricter control over the energy sector. These policies can lead to increased government influence over energy prices, supply chains, and investment decisions.

Quarterly Outlook

01 /

  • Upending the global order at blinding speed

    Quarterly Outlook

    Upending the global order at blinding speed

    John J. Hardy

    Global Head of Macro Strategy

    We are witnessing a once-in-a-lifetime shredding of the global order. As the new order takes shape, ...
  • Equity outlook: The high cost of global fragmentation for US portfolios

    Quarterly Outlook

    Equity outlook: The high cost of global fragmentation for US portfolios

    Charu Chanana

    Chief Investment Strategist

  • Asset allocation outlook: From Magnificent 7 to Magnificent 2,645—diversification matters, now more than ever

    Quarterly Outlook

    Asset allocation outlook: From Magnificent 7 to Magnificent 2,645—diversification matters, now more than ever

    Jacob Falkencrone

    Global Head of Investment Strategy

  • Commodity Outlook: Commodities rally despite global uncertainty

    Quarterly Outlook

    Commodity Outlook: Commodities rally despite global uncertainty

    Ole Hansen

    Head of Commodity Strategy

  • Macro outlook: Trump 2.0: Can the US have its cake and eat it, too?

    Quarterly Outlook

    Macro outlook: Trump 2.0: Can the US have its cake and eat it, too?

    John J. Hardy

    Global Head of Macro Strategy

  • Equity Outlook: The ride just got rougher

    Quarterly Outlook

    Equity Outlook: The ride just got rougher

    Charu Chanana

    Chief Investment Strategist

  • China Outlook: The choice between retaliation or de-escalation

    Quarterly Outlook

    China Outlook: The choice between retaliation or de-escalation

    Charu Chanana

    Chief Investment Strategist

  • Commodity Outlook: A bumpy road ahead calls for diversification

    Quarterly Outlook

    Commodity Outlook: A bumpy road ahead calls for diversification

    Ole Hansen

    Head of Commodity Strategy

  • FX outlook: Tariffs drive USD strength, until...?

    Quarterly Outlook

    FX outlook: Tariffs drive USD strength, until...?

    John J. Hardy

    Global Head of Macro Strategy

  • Fixed Income Outlook: Bonds Hit Reset. A New Equilibrium Emerges

    Quarterly Outlook

    Fixed Income Outlook: Bonds Hit Reset. A New Equilibrium Emerges

    Althea Spinozzi

    Head of Fixed Income Strategy

Content disclaimer

None of the information provided on this website constitutes an offer, solicitation, or endorsement to buy or sell any financial instrument, nor is it financial, investment, or trading advice. Saxo Bank A/S and its entities within the Saxo Bank Group provide execution-only services, with all trades and investments based on self-directed decisions. Analysis, research, and educational content is for informational purposes only and should not be considered advice nor a recommendation.

Saxo’s content may reflect the personal views of the author, which are subject to change without notice. Mentions of specific financial products are for illustrative purposes only and may serve to clarify financial literacy topics. Content classified as investment research is marketing material and does not meet legal requirements for independent research.

Before making any investment decisions, you should assess your own financial situation, needs, and objectives, and consider seeking independent professional advice. Saxo does not guarantee the accuracy or completeness of any information provided and assumes no liability for any errors, omissions, losses, or damages resulting from the use of this information.

Please refer to our full disclaimer and notification on non-independent investment research for more details.
- Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)
- Full disclaimer (https://www.home.saxo/legal/disclaimer/saxo-disclaimer)

Saxo Bank A/S (Headquarters)
Philip Heymans Alle 15
2900
Hellerup
Denmark

Contact Saxo

Select region

International
International

All trading and investing comes with risk, including but not limited to the potential to lose your entire invested amount.

Information on our international website (as selected from the globe drop-down) can be accessed worldwide and relates to Saxo Bank A/S as the parent company of the Saxo Bank Group. Any mention of the Saxo Bank Group refers to the overall organisation, including subsidiaries and branches under Saxo Bank A/S. Client agreements are made with the relevant Saxo entity based on your country of residence and are governed by the applicable laws of that entity's jurisdiction.

Apple and the Apple logo are trademarks of Apple Inc., registered in the US and other countries. App Store is a service mark of Apple Inc. Google Play and the Google Play logo are trademarks of Google LLC.