As European politicians begin to pack their suitcases and head to the beach, they do so against a domestic backdrop that begins to look distinctly ominous. In Britain and France, nationalist populist parties consistently lead in the polls. In Germany, the particularly extreme Alternative für Deutschland is neck and neck with the conservative CDU. Specific dynamics might vary but the unsettling pattern is the same – large swaths of voters increasingly identify with authoritarian and often xenophobic political forces.
Prolonged post-industrial malaise, wage stagnation and austerity have precipitated this wave of disaffection with the mainstream, especially among the less well-off. Yet in London, Paris and Berlin, governments of the centre-left and centre-right seem intent on alienating disillusioned electorates still further. During his visit to London last week, the German chancellor, Friedrich Merz, heralded a new strategic partnership for changed times between Germany, Britain and France. But a much-needed economic reset, which dismantles failed fiscal orthodoxies, seems as far away as ever.
The fallout from Sir Keir Starmer’s failed and misguided attempt to target disabled benefit recipients, in order to stay within arbitrary financial rules, will haunt Labour’s summer. Last week, it was the turn of the centre-right French prime minister, François Bayrou, to sing from the same unpopular hymn sheet. Presenting his government’s provisional budget plans for 2026, Mr Bayrou proposed a real-terms cut in all spending areas bar defence. He also advocated the freezing of tax thresholds, pensions and benefits, deep cuts to the welfare budget and the abolition of two national holidays. Mr Merz is similarly intent on an overhaul of welfare benefits, including cuts to rent subsidies and harsher sanctions for the long-term unemployed.
The accompanying rhetoric, in each case, has called for collective sacrifice to the common good. Sir Keir and his chancellor, Rachel Reeves, speak of tough choices and trade-offs. Mr Bayrou last week instructed French voters that “everyone must participate in the effort” to reduce public debt, while refusing to countenance proposals for a 2% tax on very wealthy individuals. Mr Merz routinely lectures Germans on the need to work more.
It won’t wash. The legacy of the pandemic, the cost of keeping ageing populations healthy and the moral imperative of the green transition undoubtedly represent huge challenges. Donald Trump’s trade wars may become another serious headwind to face. But large numbers of voters in western liberal democracies are no longer listening to arguments that claim “we are all in it together” – and with good reason. According to a recent survey by a French business magazine, between 2010 and 2025 the collective wealth of France’s super-rich grew from €200bn to €1.2tn – a 500% increase. Inherited wealth has more or less doubled as a proportion of GDP in advanced economies since the middle of the last century. Despite this massive upwards redistribution of rewards in western liberal democracies in past decades, mainstream parties are continuing to seek to balance the books by inflicting economic pain on vulnerable people and those just about getting by.
A paradigm shift is urgently needed. Mr Merz rightly insisted in London that a different European approach was required to cope with a new and threatening era. That goes for the economy as well as defence and foreign policy. Shredded social contracts will not be renewed by bearing down on those already struggling, as the far right surges.
