Looking Ahead to 2017

 

WEEKLY COMMENT 1-12-2016

By Barry Edwards

Looking Ahead to 2017

 

Big changes are about to happen in America and Europe in the way governments respond to the reactions of voters in the elections and referenda that have been held or about to be decided. There are many ideas and proposals out there from commentators and economists suggesting ways to proceed which may be considered by the new administrations that are about to control the affairs of government. There has not been a time of political turmoil for decades creating an atmosphere of expectation and foreboding at the same time.

All of us have discussed the consequences of Brexit and the Trump victory in America but there are other elections and a referendum that could have enormous influence on the future of Europe and world relations. This Sunday the Italians are holding a referendum on planned changes to the constitution and the Austrians are deciding who will be their next president. The result of both these polls could change the future path of the EU and determine whether it actually still exists in its current form in the next few years.

In the spring next year there are the French and Finnish presidential and the Dutch general elections followed by the German Chancellor election in the autumn. Although the populists are not expected to gain power in any of these countries nobody can be certain looking at the outcomes of recent elections. Looking ahead to 2017 it is not easy to predict what the future holds.

In America, Donald Trump seems to be gaining respectability and the more outrageous plans have been watered down as more established politicians decide to work with him. The markets have responded very favourably and achieved record highs suggesting fund managers believe his policies will generate growth and better employment for those people who are underutilised.

Brexit has not had the big negative impact some predicted but it sent a clear message to the EU leaders and bureaucrats that people are not convinced their approach has a future and the opinion polls suggest many Europeans throughout the EU have similar views. There has been talk about a real change of attitude within the EU and politicians are beginning to suggest that the free movement of people could be adapted to allow countries to have more control. It is early days but it does seem that the reasons for this discontent are being listened to and considered.

The main theme in all these polls is that people are clearly not happy with the way in which they are governed and the lack of opportunity to improve living standards. Prior to the financial crisis most people could find ways to earn a decent living and let the politicians get on with running the country. The last eight years has changed all that and the low growth in all developed economies has not allowed people to make a better life for themselves apart from the minority at the top of the earnings spectrum. As a result of that many people are now taking an interest in how they are governed and do not like the lack of attention paid by politicians to the causes of their hardship.

Getting elected and administering the affairs of state for a specified term without much involvement by the people does not wash anymore. People are demanding more participation in their affairs locally and regionally with more say in how the country is run. The problem is that how that is done is not at all clear and a method of implementing a system that could achieve that ambition does not really exist. Some countries have a devolved regional system of decision making while others such as the UK have a centralised approach. Both processes have people voting to change things without any alternative to improve the system coming forward other than a new way of doing things needs to evolve.

The Italian referendum is the first of the major polls that could start the chain of events that show how this new evolution will unfold with the next six months giving results of elections that confirm the direction it is taking. We will have to wait and see how it progresses but it certainly will be an interesting experience.

That’s all for this week, more observations next week.