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Views from a Local

23 February 2017 by Aza Teeuwen

After an eventful 2016 (with the UK electorate voting to leave the EU and a Trump victory), this year our attention switches to the core of the Eurozone as voters decide which path their future should follow; the Dutch elections take place in three weeks (15th March), with the first round of the French presidential elections following in April, and the deciding second round on 7th May. Both the French and the Dutch elections have attracted significant media attention, with growing speculation regarding the rise in popularity of the anti-European parties and the ramifications of either Marie Le Pen (French, National Front) and Geert Wilders (Dutch, Party for Freedom) gaining significant ground or even winning the respective elections outright.

In most of the popular international press a Dutch EU exit (or “Nexit”) has become an increasingly debated topic; however, as a Dutch national I feel that the forthcoming election is  a non-event from a market perspective. Unlike in France, where the results are a lot more binary, an absolute majority in the Netherlands is virtually impossible for any one party to achieve, due to government being formed by proportional representation. Even if Wilders attracts the highest number of votes he is very unlikely to be in a position to form a government and become PM, as every other mainstream party has publically stated that they would not be willing to cooperate with The Party for Freedom due to the extremist views held by the right wing party.

As a voter, this year I have the choice of no less than 28 different parties, including 14 new ones such as “Non-Voters”, “Think” and “VoteNL”. It is clear though, that a lot of people are unhappy with the current establishment, and there will be protest votes against the status quo, but that is not a new phenomenon, and with so many ‘alternatives’ to vote for, the dilution effect will almost certainly result in a highly granular parliament.

If we look at the polls of the last couple of weeks it’s clear that Wilders’ party is in the lead with 17-20% of the votes, depending which poll you look at. The current Prime Minister, Mark Rutte of the VVD (Liberals), has, however, seen his support slowly gain momentum as the recent economic data improves (e.g. unemployment down to 5.3%), with the recent polls suggesting he will obtain 16-18% of the electorate support.

Personally, I think there is a big risk that a workable coalition government will prove very challenging to form; but I also question whether this will really be that bad  an outcome! After all, a few years ago Belgium seemed to operate perfectly well without a recognised government for almost 18 months. To me, the real event that markets should be concerned about is the forthcoming French elections, which have the real potential to be a major market moving event should the more extreme parties on the left and right successfully win through to the second and final round.

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