If there were a single image that summed up the quick rise of Europe’s anti-establishment parties, is was the one of Alexis Tsipras and Pablo Iglesias together, on stage, at an anti-austerity rally in Athens just before the Jan. 25 Greek election. Wearing their trademark open-neck blue shirts – no neckties ever for them – their arms were outstretched, as if in celebration, as the crowd cheered them on.
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Mr. Tsipras, the leader of the radical left Syriza party, would win that election; Mr. Iglesias, leader of Podemos (We Can), the Spanish equivalent to Syriza, would top the polls in Spain, much to the distress of the mainstream parties.
The image implied that the populist revolution had arrived in Europe, where the centre-right and centre-left parties that had ruled for decades were in full retreat as voters grew angry at the stalled recovery, the harsh austerity measures and the obscene unemployment levels.
But could January have been the peak of the populist movement? Shortly thereafter, Syriza was riven by infighting as its efforts to make a breakthrough with its bailout masters in Brussels and Berlin went nowhere. Podemos’s rise stalled as spring approached. In Britain, the UK Independence Party, whose goal is to yank Britain out of the European Union, won only one seat in the May 7 election; even UKIP’s leader, Nigel Farage, got shut out. Beppe Grillo’s anti-establishment Five Star Movement, Italy’s biggest opposition party, lost momentum. While the Euroskeptic Finns Party placed second in Finland’s election, their vote tally fell by two points.
Investors have applauded the apparently flattening popularity curve of the protest parties. Bond yields, with a little help from the European Central Bank’s ultra-easy monetary policy, have sunk throughout the euro zone. The rage against the middle-party machine seemed less shrill as the economy improved. The falling euro and oil prices, and the ECBs €1.1-trillion ($1.3-trillion) quantitative easing program, helped.
Not so fast. Rumors that the populist surge is over might be exaggerated, greatly so.