Keeping a close eye on Mario Draghi’s next move, he and his Merlin multi-manager colleagues contemplate the political turmoil facing Europe over the coming year.
Writing just a week before the Austrian presidential election, in which Norbert Hofer and his far-right Freedom Party of Austria looks to be a possible contender, and the coinciding Italian referendum on constitutional reform – being led by Democratic Party leader and Prime Minister Matteo Renzi, Irvine said the rise of populism and anti-EU manifesto at its strongest in decades with momentum gaining.
With the Brexit vote and Donald Trump’s election success seeming to pave the way for anti-establishment political contenders, he said 4 December would be a very important day for European politics.
Renzi has threatened to resign if he loses the vote – which will open the doors to reform the appointment and powers of the Parliament of Italy as well as powers held by the state, regions and other administrative entities. A ‘no’ vote would result in a leadership vacuum in the country that could encourage the anti-EU Five Star Party, Irvine pointed out.
Further, Netherlands and France also hold general and presidential elections in March and April respectively, and Germany will follow with a general election and various state elections in the autumn.
Irvine said victories from anti-EU parties, and Marine Le Pen’s National Front in France currently holding a quarter of the popular vote, pointed to a major shift in the overall balance of power across the continent.
“Lots of political factions have seen that if the British can do it with Brexit and the US can do it with Donald Trump then this is [their] time to start pushing boundaries. Europe is starting to fracture as these movements are starting to have a real impact.
“Having said that, change does not always have to be bad for investors. There is additional volatility and a change of tack is required so you have to reappraise things, but there is nervousness about Europe against a rising level of disapproval of the EU.”
He described the comparisons being drawn between Trump and Ronald Reagan in the last 1970s.
Trump already appears to have started backtracking from some of the more controversial aspects of his campaign and the most important thing between now and his inauguration in January, according to Irvine, were the people he appoints to office.
“While Reagan might have been a state governor [of California] if you look at the comments made about both men they are almost interchangeable.
“But what Reagan did was surround himself with a group of individuals who were really smart – whether you agreed with them or not – and they turned what has been seen as a very broad vision into what ultimately became ‘Reaganomics’ and went on to define economic, social and foreign policy for an entire generation. It became a very powerful force. Will Donald Trump do the same? We’ll have to wait and see.”
