MacroScope

Mixed results for right in early voting

By Mike Peacock
May 23, 2014

The British and Dutch got EU elections underway yesterday and gave only mixed support to the rise of the right.

An exit poll from the Netherlands showed the anti-Islam, Eurosceptic Freedom Party of Geert Wilders’ – which plans to forge an alliance with France’s far-right National Front – had fallen well short of its goal of topping the poll and may even have slumped into fourth place. That would give it three out of the 26 Dutch seats in the EU assembly, down from four in the last elections held in 2009, when it came in second place.

Britain’s anti-EU UKIP seems to be doing much better. There were no indications of how the EU parliamentary vote had gone in Britain, we’ll have to wait for Sunday for that, but parallel local government election results showed a surge in support for the party.
With those results still coming in, Nigel Farage’s party – many call it a one-man band – had secured a net gain of 90 local council seats and was winning well over 20 percent of the vote, mainly at the expense of the ruling Conservatives.

If it performs even more strongly in the EU poll, UKIP will heap pressure on Prime Minister David Cameron to adopt a more extreme position on repatriating powers from the EU and possibly change the dynamics of a planned in-out referendum in 2017.
Given UKIP’s signature policy of withdrawing from the EU, there is some reason to think it will fare even better in that vote.

In terms of the national picture, the early local government results do not suggest that the opposition Labour party has done well enough to be confident of winning national elections next year.

The EU’s 26 other member states vote over the weekend and overall Sunday’s results are likely to show one of the populace expressing dissatisfaction as economies recover only slowly from years of financial crisis.

That will deliver anti-EU parties stronger support than ever before but there is no certainty that they can club together in a new-look European Parliament to seriously disrupt the bloc’s business. The main centre-right and centre-left groups will continue to dominate the assembly and may well work more closely together to keep the European project on track.

Its Ratings Friday and a bit of a bumper one too. Fitch has already upgraded Greece by one notch to ‘B’, two levels short of investment grade, and given it a stable rating.

Greece has returned to the bond market and is beginning to show signs of turning a corner but the EU elections have injected a new element of uncertainty. If the far-left, anti-bailout Syriza polls particularly strongly that could undermine the coalition government which holds a slender two-seat majority in parliament but is facing a backlash for years of austerity.

S&P has raised Spain’s rating by one rung to ‘BBB’ with a stable outlook and revised up its average 2014-2016 GDP growth forecast to 1.6 percent from 1.2 percent, reflecting the effects of labour and other structural reforms. It has also affirmed the Netherlands’ ‘AA’ rating despite first quarter GDP sliding by a startling 1.4 percent.

The data over the last week have, in the round, shown Germany charging ahead and Spain holding its own but France stagnating and Italy, Portugal and the Netherlands slipping back into contraction. The pound, meanwhile, is reaching heady heights on the basis that the Bank of England will be the first major central bank to blink in the face of a now robust recovery.

Detailed German GDP data, just out, showed strong investment and consumer spending drove the German economy to its fastest growth in three years of 0.8 percent in the first quarter.

Still expected today are Moody’s verdicts on France and Britain, and Standard & Poor’s on Turkey.

Ukraine presidential elections are only two days away. The question of how those polls can be securely conducted in parts of the country where pro-Russian rebels want to secede remains a very live one. The interior minister in Kiev has said it would be impossible to hold “normal elections” in the regions of Donetsk and Luhansk which are home to nearly 25 percent of the electorate and on Thursday more than a dozen servicemen were killed in a clash with separatists.

Vladimir Putin’s St. Petersburg economic forum continues. He will have been buoyed by a huge gas deal with China but will find it hard to ignore how many senior international executives boycotted a conference billed as Russia’s answer to Davos.

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