The Brief – Economics by populism

The Brief is EURACTIV's evening newsletter

One of the reasons so many voted for Viktor Orbán’s Fidesz yesterday is the good state of the Hungarian economy. Orbán may be criticised for being the standard bearer of modern autocracy, but since he took office in 2010, growth in his country has almost quadrupled. Wages have risen by more than 10%.

The government says 730,000 jobs have been created since 2010. The figure could be challenged, as the government has also created low-skill jobs for workers who are paid the minimal wage but still, the progress is obvious and undeniable.

Unemployment has fallen from 11,6% to 3,8%. Orbánomics are said to be protectionist, and indeed “special taxes” have been imposed on foreign investors. But many foreign companies are still queuing to invest in Hungary.  6,000 firms employ 300,000 people, and that is just German firms.

In Poland too, the leadership is (often) bizarre and ultra-conservative but the economy is booming.

Jerzy Kwieciński, minister for investment and development, has recently cited data that put Poland’s economic growth in the last quarter of 2017 at 5%, and the average for the whole year at 4.6%. He said Poles were getting “more and more happy” and this translated into political support to the ruling Law and Justice (PiS) party, which he said was at an all-time high of almost 50%.

In the US, Donald Trump is from the same category of bizarre politicians as Orbán and Poland’s Kaczyński. He is often criticised for his political thinking that protection will lead to greater prosperity and strength.

But the US economy is doing well, at least if we look at Trump’s favourite economic indicators over the past year, the price of US stocks.

The Dow Jones Industrial Average – which follows the shares of 30 major US companies – has risen to record highs throughout the past year. In one year – from November 2017 to November 2018, the Standard & Poor’s 500 index of the leading 500 American companies is up by some 22%. That equates to an increase in value of around $4 trillion.

Under Trump, unemployment is falling – to 4.1% in December – and close to its lowest-ever recorded level of 3.9% in 2001. Monthly job creation has been strong during his presidency, averaging around 170,000 a month. Trump claims to have boosted US employment through his exhortations for manufacturers to repatriate jobs to American soil.

It is, of course, uncertain how things will continue and if Trump has the right to claim credit for an economy that he inherited from Barack Obama. His trade wars with China and the EU could still backfire.

It also remains to be seen how the UK economy will wrestle with the challenges of Brexit, but it could yet prove to be more resilient than generally assumed.

The narrative that moderate, mainstream politics provide better economic security is being challenged before our eyes, and this should give some food for thought to EU strategists ahead of the European elections in 2019.

The Roundup

Incumbent Ilham Aliyev is a dead cert to win the snap presidential election in Azerbaijan this Wednesday. The real intrigue lies, however, in the balancing act with Armenia.

Hungary’s Viktor Orbán won a third straight term in power in Sunday’s elections after his anti-immigration campaign message secured him a two-thirds majority in parliament based on preliminary results.

As the EU struggles to respond to deterioration of the rule of law in a number of its member states, it must involve a more gradual process than the arsenal of radical tools currently available, the Jacques Delors Institute suggests.

In Germany, cities applying for funding of Smart Cities projects face steep hurdles and private companies, not citizens, seem to be the main winners.

Travellers struggled with another crippling wave of transport strikes in France this weekend, as train workers protested against President Macron’s economic reforms. Talks between unions and management have hit a wall.

With or without tariffs, the recent uptick in trade growth looks unlikely to continue over the next few years, argue Ilaria Maselli and Ataman Ozyildirim, who describe three longer-term trends to watch out for.

An UN interim strategy draft calls on international shipping to cut total annual greenhouse gas emissions from 2008 levels by at least 50% by 2050.

The Renewable Energy Directive has encouraged the practice of burning mixed municipal solid waste to generate ‘renewable’ energy, which has distorted the waste market, writes Janek Vahk.

European cement producers appear to be lagging behind when it comes to decarbonisation as they were singled out among the worst performers in a new environmental ranking.

Meanwhile, a study by Climate Action Network Europe indicates that instead of pursuing real decarbonisation plans, energy-intensive industry in the EU has managed to turn pollution into a cash-grab.

Away from federalist EU. Poland’s foreign minister calls for strengthening the role of states and national parliaments in European decision-making process.

Germany’s cybersecurity chief argues the Commission would be better off gearing up its internal systems against hackers instead of bossing around member states that oppose new controversial draft legislation for a new system to rank the cybersecurity level of technology products.

The Ebola epidemic has enabled experts to draw a series of conclusions in a bid to improve health services at least in Guinea, a Parliament delegation learned during a on-the-ground visit.

Look out for…

The opening session of the 7th European Citizens’ Initiative Day 2018. The conference is taking place at a time when the three institutions – Parliament, European Economic and Social Committee and the Committee of the Regions – will have adopted or nearly finalised their opinions and reports, which will mark the beginning of three-way consultations.

Views are the author’s

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