Europe stumbled over the successive hurdles of numerous elections this year and emerged relatively unscathed, despite each being heralded by many in early 2017 as one of the key headaches for investors.
Populism, once feared as the end of life as we know it, came to little more than a handful of vocal protests and didn’t translate at the ballot box.
Yet, evidently people are still not happy, and the struggle of governments to retain their “political capital”, according to LGIM fixed income strategist Christopher Jeffrey, will begin weigh down on markets in some form or other.
The remnants of populism and the distrust of mainstream political parties and politicians is still evident in the swathe of poor approval ratings for leaders around the world.
Take French President Emmanuel Macron, who’s reported €26,000 (£24,000) make-up bill and perceived lack of respect for the military has cast a pall over his office, despite impressing with his 15-month old En Marche! party victory in May. Less than a third of the French approve of his presidency so far, according to a YouGov poll published Monday.
Similarly, US President Donald Trump has seen his blaze of golf-course tanning and incessant tweeting lead to a slump in his approval ratings. After 100 days in office his 34% rating makes him one of the least popular presidents since approval was first measured after WW2.
In the UK, Theresa May may have held on to the job as Prime Minister by the skin of her teeth in June’s snap election, but has seen her own approval slide steadily ever since.
An Ipsos Mori poll found just 34% of British adults were satisfied with her leadership in July, the lowest level since she entered Downing Street a year ago.
In Asia, Japan’s Yomiuri newspaper placed 36% of the Japanese population as backing prime minister Shinzo Abe with just one year left of his second term leading the Liberal Democratic Party.
LGIM’s Jeffery says low approval ratings weigh down on a leader’s political capital, and have a big impact on markets.
Pointing to Trump, he says: “This is critically important for financial markets given the President’s radical economic agenda.
“Expectations of lower taxes, deregulation, and increased infrastructure spending helped drive up interest rates, inflation expectations, and the equity market immediately after the election.”
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