Eurasia Press & News
It’s generally accepted that right-wing politicians in power are a boon to economic growth, since, unlike leftists, they favor business freedom, strong competition, and reasonably low taxes. In the current context of a pan-European economic downturn, moderate right-wing governments are forced to implement unpopular reforms, as in Italy and Greece. But the downturn in Europe is also leading to growing support for far-right populists with completely different policies that run counter to the traditional tenets of the economic right: fighting migrants, rejecting integration, tariff wars, etc. Implementing this program threatens European countries with growing budget deficits, acute labor shortages, and new debt crises.
In recent years, the European economy has been struggling. Due to several energy crises linked to supplies from Russia, EU residents have faced elevated inflation, rising refinancing rates, and an economic slowdown. EU GDP growth was only 1% last year, and was even lower before that. The European Commission doesn’t expect significant improvements and forecasts that growth will remain roughly flat in 2025 and increase to 1.5% in 2026.
A year ago, former European Central Bank (ECB) President Mario Draghi, who once saved Europe from a debt crisis, presented his plan for EU reforms designed to prevent recession. But since then, nothing has been implemented. Donald Trump created additional problems from outside by launching a tariff war. But political crises are perhaps even more disruptive. For example, the September government dissolution in France, one of Europe’s largest economies, pushed the yield on its 30-year bonds down to 2008 levels.
But overall, the EU’s overall problems, which Draghi sees, are not yet evident at the level of individual countries. “There are currently no countries in Europe where the situation is so catastrophic that radical reforms are required,” notes University of Chicago professor Konstantin Sonin. Indeed, in historical terms, Europe’s current slow growth doesn’t seem out of the ordinary, and several Eastern European countries are actually showing decent GDP and income growth. However, the wave of inflation that swept across Europe has had a particularly severe impact on the poorest segments of the population, whose support underpins the current popularity of the far-right. They are leading or occupying high positions in polls in France and Germany, and briefly led a coalition in the Netherlands. The paradox is that even before coming to power, far-right forces often negatively impact the economy: moderate politicians, faced with such opposition, are wary of passing sometimes painful but necessary laws for fear of losing elections. However, some are still succeeding, despite the protests.
Meloni’s injury saves Italy
Giorgi Meloni, leader of the Brothers of Italy party, who became Italy’s prime minister in October 2022, is often reminded that in her youth she called Benito Mussolini a “good politician” and declared her lenient stance on fascism. But today, she can hardly be classified as a member of the far right: her government imposes long prison sentences on extremists and prosecutes those who make “Roman salutes.”
Her economic policy is also far from far-right. Over the past three years, Meloni’s government, while running a budget deficit, has been gradually reducing it. This is because, back in 2023, the authorities allocated tens of billions of euros to support companies and residents during the energy crisis. And in 2024, Meloni lowered the personal income tax rate for the middle class. Combined with low healthcare spending , this prompted trade unions to organize mass protests. Meanwhile, Italy expects to bring its budget deficit into compliance with EU regulations by the end of 2025, a year earlier than previously expected.
Meloni is tackling the deficit to curb Italy’s enormous public debt, which stands at 137% of GDP. The IMF views this as a “moderate” fiscal risk. However, this assessment includes mitigating factors such as the ECB’s ability to provide assistance and market confidence that the EU is monitoring the debt and will not allow it to spiral out of control, according to Lukas Guttenberg, Senior Advisor at Bertelsmann Stiftung, and Nils Redeker, Deputy Director of the Jacques Delors Centre.
Perhaps the Italian government would be less disciplined, but for Meloni herself, not increasing public debt and not spooking investors are top priorities, according to people familiar with her. The debt crisis that led to the fall of her political mentor, Silvio Berlusconi, remains such a painful memory for Meloni that it continues to influence all her decisions. Consequently, Italy is lagging in increasing defense and security spending.
“Lazy” Greeks and the six-day work week
Greece, still recovering from the 2015 debt crisis, will implement a six-day work week in 2024. This is happening under the government of Kyriakos Mitsotakis, leader of the right-wing liberal New Democracy party. His cabinet believes this is an effective way to combat the labor shortage, as approximately 500,000 people have left the country since 2009.
Greece used to have a 40-hour workweek, but now they’ve decided to increase it to 48 hours, like many other European countries. Workers can also choose a five-day week, but with extra hours on weekdays.
Six-day workweeks can be declared by managers of companies that operate around the clock. The decision whether to work on the sixth workday remains with the employee. Additionally, they receive a 40% bonus for Saturday work and 115% for Sunday and public holiday work. Despite this, trade unions have already criticized the regulation, and people have taken to the streets.
“When virtually every other civilized country is introducing a four-day workweek, Greece is choosing a different path […],” said Akis Sotiropoulos, a member of the executive committee of the Adedy civil servants’ union. “In reality, this decision was made by a government ideologically driven by the desire to maximize profits for capital.”
Other critics of the reform argue that it will completely destroy the five-day work week, since the lack of state control measures in the workplace will allow employers to dictate a more advantageous six-day work week.
Migrants divide the Netherlands
In early June, the Dutch government collapsed when Geert Wilders, leader of the far-right Party for Freedom, pulled it out of the ruling coalition. The dispute stemmed from a dispute over immigration policy.
Wilders proposed a plan to radically reduce immigration, including deploying the army to ensure security and patrol the borders. He recommended sending all asylum seekers back to the border and closing refugee centers.
All Syrian refugees must be sent home immediately, Wilders insisted.
Wilders insisted that all Syrian refugees should be immediately sent home, EU asylum quotas suspended, and family members banned from joining refugees already in the country. Some of these proposals violate European human rights law and the UN Refugee Convention, to which the Netherlands is a signatory. But Wilders warned that if his initiatives are not adopted, the largest party in parliament (37 of 150 seats) will leave the cabinet.
Following this, non-partisan Prime Minister Dick Schof submitted his resignation to the king and the dissolution of the cabinet. “We have decided that this government currently lacks support,” Schof told reporters in The Hague after an emergency government meeting, adding that he considered Wilders’ decision “irresponsible and unnecessary.”
Coalition partners reacted angrily to Wilders’ decision. Particularly noteworthy was the assessment of the leader of the right-wing VVD party, Dilan Yeşilgöz (her father is a left-wing activist from Turkey who emigrated to the Netherlands):
“We had a right-wing majority, and now he’s letting everything slide for the sake of his own ego. He’s just doing what he wants… He’s making us look like fools. He’s running away at a time of unprecedented uncertainty.”
This has led to new elections to the parliament, which forms the government, being held on October 29.
This didn’t have an immediate and direct impact on the country’s economy: everyone was so accustomed to the country’s perpetually shaky coalitions that the stock market didn’t react at all, and Bert Kolijn, chief economist at the Netherlands’ largest banking group, ING Group , said that “the Dutch economy, labor market, and public finances are functioning properly.”
At the same time, the Netherlands is now unable to implement important reforms and sharply increase defense spending to 5% of GDP, as required by NATO. Currently, the Netherlands spends just over 2% of GDP and even in 2026 promises to increase it only to 2.2%.
Economic reforms are also undermined by the fact that, for example, a year ago, Moroccan-born State Secretary for Customs and Welfare Nora Achabar resigned from the government . The reason was racist remarks she heard in government about migrants after a football match in Amsterdam, which ended with Israeli football fans being beaten. Wilders blamed Moroccans for this.
And the country needs economists: in 2023, labor productivity fell by 1.3%, one of the most significant declines in the last fifty years and the second-largest since the credit crunch in 2009. At the same time, the Netherlands also experienced a mild recession: the economy contracted by 0.3% in the second quarter compared to the first. Clearly, addressing such problems is more difficult with an unstable government.
Germany and France get ready
For now, the far-right’s influence remains limited, and they haven’t succeeded in implementing all their ideas. However, the picture could change dramatically if they come to power in such pillars of the European economy as France and Germany. There, and even in the UK, which has left the EU but is still geographically part of Europe, far-right parties are becoming increasingly popular.
In France, Marine Le Pen’s National Rally enjoys 36% of voter support, far outpacing other political forces. According to polls, the party’s candidate would win in the first round of the presidential election. The Alternative for Germany (AfD) has, in recent months, caught up with the government-led Christian Democratic Union (CDU) in support, and in a recent Forsa poll, it surpassed the CDU. In Britain, Nigel Farage’s Reform UK party is outperforming the Tories and Labour.
Right-wing populists will come close to gaining power in all of these countries if current leaders fail to address migration issues and the rising cost of living, Mujtaba Rahman, head of the consulting firm Eurasia, commented in an interview with The Wall Street Journal . Economic decline, rising prices, and a growing number of migrants are a dangerous combination that has driven many voters away from traditional parties.
“By 2027, the far right could be in power in countries whose economies account for half of Europe’s GDP,” writes The Economist. “The far right’s success will entrench practices such as public support for privileged groups, protectionism, and hostility to competition.”
Their fiscal profligacy will create even more problems. Furthermore, British journalists note, the far-right’s intransigence could shake investors’ faith in the European economy, as radicals are not fond of compromise. And EU leaders often need to coordinate their economic policies with each other.
The intransigence of the far right could shake investors’ faith in the European economy, as radicals are not fond of compromise.
Farage, Le Pen, and AfD leader Alice Weidel are all promising their voters essentially the same thing: the mass deportation of migrants. Specifically, Farage intends to abolish indefinite residence permits for 800,000 “young and low-skilled” immigrants.
Le Pen, who frequently speaks of ethnic crime and unrest, is open to adding the term “undesirable migrant” to the law on foreigners. Weidel, meanwhile, plans to close borders, turn back undocumented people, and institute a process of “re-emigration.” The AfD also wants to buy Russian gas and is reluctant to condemn the war in Ukraine.
All this threatens the three leading European powers with the same consequences that Britain faced after Brexit—namely, a shortage of personnel in low-skilled and low-paid positions (for example, drivers). As for crime, many countries are now, on the contrary, legalizing even potentially dangerous “specialists”—for example, prostitution and the sale of soft drugs. This makes them easier to monitor.
The far right also has projects unrelated to migrants. For example, back in 2017, Le Pen attracted French nationalists with promises to build more prisons, expand the police force, and increase military spending. The leader of the National Rally also proposed Frexit, or exit from the European Union, which would again threaten France with the same problems that Britain faces.
Her young successor as party president, Jordan Bardella, also proposes strengthening the security apparatus. In terms of the economy, he proposes stimulating industry by continuing to reduce production taxes; allowing employers to raise wages to three times the minimum wage, but exempting them from increasing contributions for three to five years; introducing a progressive pension system that would motivate young people to return to work as early as possible and address the problem of low-skilled labor (they propose this as a way to replace migrants – The Insider) ; and suspending VAT on 100 essential goods.
Furthermore, Bardella proposes tax and credit incentives for families to boost the birth rate among native-born citizens rather than migrants. On the external front, the far-right leader wants to tighten import controls and support domestic producers, for example, by requiring cafeterias to use 80% domestic agricultural produce in their meals.
In his platform, Farage promises to exempt 7 million people from income tax, or one in ten Britons. These are those with incomes of up to £20,000 per year. This will save workers around £1,500 per year, according to the Reform UK leader. But this same money will also be lost to the national budget. He also promises to reduce fuel excise duty by 20 pence per liter for both individuals and businesses, and to abolish VAT on energy bills, tourist tax, inheritance tax, environmental duties, and other levies. He also wants to exempt more than 1.2 million small and medium-sized businesses from corporation tax, and reduce the basic rate for some companies from 25% to 20%, and from 20% to 15% from the third year of the reform. However, Farage is unprepared to specify how much the country will lose from this or how it will impact the economy. Usually, he simply indicates the total amounts of various expenses on migrants and hints that he will completely reduce them.
In his platform, Farage promises to exempt 7 million people from income tax, that is, one in ten Britons
The AfD’s German platform is even less concrete . For example, in 2017, in the section “Eliminating the Financial Vulnerability of Families,” the party made a vague promise to implement “profound reform” for the benefit of Germany, including in the area of social security.
The German far-right also advocated revising the pension and tax systems to ensure that large families with low and middle incomes enjoy a “standard of living above the minimum subsistence level” and a pension sufficient for a dignified old age. No specific measures were mentioned here either. The AfD hinted that they would provide financial incentives for those who choose “raising children over a career.” In essence, they are proposing a society with fewer workers and more beneficiaries in the early stages (at least until children grow up and are able to become workers themselves).
However, by 2025, the German far-right had become more technical and learned to write more clearly. Now, in addition to supporting the poor, they are proposing a reduction in VAT on food and beverages in the restaurant industry from 19% to 7%, the abolition of all CO2 taxes, and the abolition of property taxes. Regarding the latter, the AfD promises municipalities full compensation through a surcharge on income and corporate taxes.
But they immediately stipulate that the size of this surcharge depends on the economic solvency of taxpayers. At the same time, the far-right proposes saving the state on NGO support and contributions to the general needs of the European Union, which will certainly complicate relations within the EU if the far-right comes to power.
Thus, far-right parties promise to redirect the flow of funds currently going toward migrants or common EU goals toward their own citizens in order to garner their voter support. However, it seems they are not particularly concerned about the economic problems that would arise from these measures. Moreover, such a simple vote-buying scheme could require more money than would be saved on benefits for immigrants.
Such a simple voter bribery may cost more than will be saved on benefits for immigrants.
On the other hand, some of the far-right’s initiatives were clearly formulated by professional economists, and not all of these measures (such as tax cuts for small businesses or wage increases for employers) deserve condemnation. Apparently, this, along with the imbalances in immigration policy, is why support for the radicals is growing.
