Andrew Van Sickle editor@moneyweek.com
What was he thinking when he called an early election? Macron, that is, not Sunak. The latter had probably lined up a job in the US. The Conservative manifesto this week (see page 10) reinforced the impression of a government longing to be put out of its misery. The most eye-catching measure was yet another iteration of Help To Buy, the eternal state stimulus for the eternally overvalued housing market from the supposed party of the free market.
More interesting for investors for now is the snap election across the Channel (see page 4). The president may well feel he can fend off the first far-right government since Vichy, but in case he can’t, is he hoping that a spell in office will force the National Rally (NR) to moderate? Or become so unpopular once people notice the gulf between action and rhetoric that it withers on the vine? After all, government “brings the burden of making decisions that cost voters money”, says Janan Ganesh in the Financial Times.
Goodnight, Vienna
Can this ploy work? Austria is an instructive example in this regard. In 2000, the centre-right party ditched the Social Democrats and formed a coalition with a far-right group called the FPO, descendants of the wartime fascist regime. As with all populists of the right (and left), the FPO’s economic programme was heavy-handed, statist, protectionist, and expensive. But the wily centre-right chancellor made sure he set the economic agenda, leaving the FPO to discover that agitating is easier than admin. Bagehot used to warn that the monarchy should avoid letting daylight in upon the magic; this was a case of letting daylight in on the dysfunction. Scandals multiplied, FPO ministers fell like flies, and in two years the FPO’s share of the vote had collapsed.
They returned to office in 2017, however. In 2019, a huge scandal brought down the entire government (the FPO leader had been caught on tape drunkenly offering someone he thought was a Russian oligarch’s daughter help with potentially lucrative public contracts). Today, the FPO is the largest party in the polls. These parties will keep coming back unless the root cause of their support – economic stagnation and fears over immigration – are addressed. There is no sign of progress on either front, so it may well be that the likes of the NR will soon find themselves in
