Dutch voters are heading to the polls in March, the firstimportant
election in what will be a key political year in Europe.
After the Brexit vote and the election of Donald Trump, the Netherlands will give the first indication of whether populism will shape 2017 too.
The Dutch elections “are the prelude for the dominant theme of the year 2017 for the euro zone: Politics,” Carsten Brzeski, chief economist at ING in Germany told CNBC via email.
“Sometimes a bit underestimated and in the shadow of the French and German elections, the Dutch elections will be seen as another test case of whether populist parties can make it into government in a core euro zone country,” Brzeski explained.
The political calendar in 2017 is already quite full. The Netherlands have their general election on March 15. France chooses its next president in May and Germany will vote for the country’s chancellery after the summer. Italy is also set for fresh general elections, though the date isn’t confirmed yet. Meanwhile, the European Union (EU) will be tackling two thorny issues: the U.K.’s Brexit and making sure Greece sticks to the terms of its rescue.
Against this backdrop, analysts wonder how well populist parties will do in the elections. At the moment, opinion polls are projecting the anti-European Party for Freedom will win the Dutch election. However, given the fragmentation of the Dutch political scene, the party’s leader, Geert Wilders, in unlikely to get a majority.
“We expect further fragmentation of the political landscape, and, as a result, difficulties in forming a new government coalition,” economists at Rabobank told CNBC via email.
“At least four parties will be required to achieve a majority in both the lower and upper house of parliament. Populist parties (most notably the Freedom Party and Elderly Party [50PLUS]) are expected to do well in the elections.”
The bank admitted that the controversial Wilders – who was convicted of discrimination against Moroccans at a political rally in 2015 – could become the next prime minister. However, his push for a Dutch departure from the EU is unlikely to materialize in such scenario.
“Even if that happens the odds of a Nexit, or other very radical policies, are still quite slim, due to the coalition system in the Netherlands and the bicameral structure of parliament,” the economists at Rabobank said.
However, the possibility of an extreme-right prime minister could see repercussions in the other EU countries.
“An interesting element of Dutch politics is that in many ways it is a front-runner for political trends in all of Europe. Populist parties already made it into government in the early 2000s and coalition-forming has become more complicated due to the rise of populist parties on both the right and the left wing of the political spectrum,” Brzeski told CNBC.
Furthermore, an election outcome supportive of anti-European policies could be “harmful” for the investment climate in the Netherlands, Brzeski added.