Joeri de Wilde: Rise of the radical right threatens the EU economy
Joeri de Wilde: Rise of the radical right threatens the EU economy
This column was originally written in Dutch. This is an English translation.
By Joeri de Wilde, Investment Strategist at Triodos Investment Management
The rise of the radical right in the European Parliament is a new blow to the European Green Deal. In all likelihood, it means a further delay in the green transition, ultimately resulting in an economy that is not future-proof.
The outcome of the European Parliament election is in line with expectations: the radical right wins seats, while the pro-European Greens and Liberals lose. The consequences of this shift cannot be underestimated, because all EU laws and the EU budget require approval from the European Parliament. Although the radical right parties still hold 'only' a quarter of the seats, this does mean more polarization and fragmentation within parliament. For the centre-right European People's Party (EPP), which is again by far the largest party, the temptation could become increasingly greater to form a majority through the (radical) right.
Green Deal under fire
The direct consequences for the green transition are clear: it will become more difficult to adopt legislation that supports the European Green Deal. This calls into question the long-term goal of making the EU the first continent to be climate neutral by 2050. The new distribution of seats could make it (much) more difficult to form majorities, and the eventual majorities could tilt firmly to the conservative right, which means a further delay in the transition. The short-term target to reduce greenhouse gas emissions by at least 55% by 2030 appears to be turning into a futile exercise.
Independence and job market at stake
The increasing influence of the radical right also indirectly hinders the transformation to a future-proof, green economy. The radical right parties argue for less EU integration. But a competitive European green industry (as envisioned by the European Net-Zero Industry Act) will only emerge through greater integration. Only together can EU Member States compete with the United States and China when it comes to building green technological capacity. This requires, for example, the completion of the European Capital Market Union, which would provide an additional investment and innovation incentive, and a substantial increase in the EU budget.
Without this kind of integration, the EU is likely to fall further behind in the global green race. With serious consequences: once again being dependent on an autocratic regime when it comes to energy, this time on imported renewable energy components from China. It would also mean missing out on more advanced jobs in renewable energy and green technology. Jobs that will form the basis of the new structure of the global economy after the fossil fuel era.
Immigration stop unwise within current system
The anti-immigration stance of the radical right is another threat to the European economy. Because unless we switch to a post-growth economy (by far the best solution, but not realistic given the current balance of power), the least bad option within the current growth-driven system is to strive for a green competitive economy.
This can only be done with the help of more workers. There are already serious labor shortages and unemployment rates are still near record lows. These developments are likely to continue in the coming years due to the further aging of the European population. We desperately need those extra workers for jobs in our green industry or to care for our elderly.
If we stop immigration, as the radical right wants, we will also lose the competitive battle with the US and China. In addition, the cost of living will inevitably rise and the quality of life will deteriorate.
The private sector must now take the lead
The growing power of the radical right could also hinder the much-needed increase in sustainable investments by the private sector. A more conservative European Parliament could give investors the idea that companies will not be forced to become more sustainable in the short term, which would allow more money to flow into the 'old' fossil fuel economy. That is why it is crucial now that private parties realize that not only the green transition, but also the competitiveness of the EU economy as a whole is at stake.