Record result for alternative right in Dutch elections forthcoming

Two elections are on the program in the Netherlands in the first half of 2019. Provincial elections take place on 20 March (the country consists of 12 provinces). These elections also automatically decide the composition for the Senate in The Netherlands. Thereafter, European parliamentary elections are held on 23 May.

A major rearrangement of the rightwing of the Dutch political spectrum seems to be on the way in these elections. Opinion polls indicate that the traditional center-right parties VVD (liberals) and the christian-democratic CDA (which form a large chunk of the Coalition led by PM Mark Rutte) jointly only can count on 32 seats (21.5%) of a total of 150 seats. This is a very big drop compared to their combined score of 52 seats in the Parliamentary elections in 2017. In fact, the two traditional centre-right parties probably have never hit this (combined) low before.

The rise of Baudet is threat to VVD and CDA

The deterioration of VVD and CDA is largely due to the rise of Thierry Baudet and his new conservative party Forum voor Democratie (FvD). Illustrative of the rapidly changing composition of the centre-right flank in Dutch politics is that membership of FvD has increased at the end of 2018 to above that of the VVD. FvD is only two years and few months old. Party membership of VVD and CDA is decreasing

The well known Dutch populist leader, Geert Wilders (PVV), however, hardly lost in the polls to newcomer FvD. The alternative right-wing opposition parties PVV and FvD have jointly even risen to 35 seats in the polls; more than 23% of the votes. The right-wing populists have so far achieved record results of just 17% of the votes in the 2002 parliamentary elections (Pim Fortuyn) and the European Parliament elections of 2009 (PVV).

What is telling is that both records took place during a serious downturn of the economy. The Dutch economy, however, was still doing well last year, but the international economy will be of little support this year. Consumer confidence has also been under considerable pressure in the Netherlands lately. An unwise VAT increase by the Rutte Coalition early this year damaged consumers purchasing power.

Sentiment is weak over taxes and climate policies

Also, a public outcry over planned policies regarding climate change seem to have engulfed the Rutte Coalition last months. As the issue of climate change is overtly being used by special interest groups to increase taxation on the Dutch population, sentiment will probably remain very soft near term. It therefore seems unlikely that the situation will improve for VVD and CDA, at least before the Provincial Council elections late March. Accordingly, a historic debacle for the traditional right – and a record result for alternative right parties – is likely in store for this spring.

The question thereafter is if the Rutte III Coalition will remain in place. The Coalition parties (apart from VVD and CDA it consists of D66 (progressive liberals) and CU (orthodox christians)) may only hold on to 35% of the seats in the Senate after the Provincial elections. Therefore, it will have to look for help on the left to be able to pass certain legislation. This could easily tear up the coalition parties. As such, the Rutte Coalition seems to be in trouble.

Not obvious that VVD and CDA will recover

Additionally, it is not obvious that VVD and CDA will easily gain back the lost ground on Baudet’s FvD. The polls could reflect a more fundamental shift in mindset of a part of the electorate. It may favour the conservative alternative over the neoliberal policies of the traditional centre right. Therefore, it can not be ruled out that VVD and CDA could get into even deeper trouble in the coming years. In any case, a more fractured and polarised political environment seems to be on the way.

Euro falls to 1.132 against the dollar

Financial markets are still under pressure from the Turkish lira crisis. The important European stock market indices fell by a few percentage points last week. The market opening a few minutes ago showed a mixed picture. No relief rally yet.

The euro also took a beating recently: by the end of July it traded at 1.17 against the US dollar; early this morning it fell to 1.132. Additionally, the euro also fell sharply against the yen. The fear is that the Turkish crisis will hit the European banking sector hard. A number of Southern European banks have large exposures on Turkey. As such, it appears that the dollar and the yen are the safehavens in this crisis.

Dutch economy grows by almost 3%

The Dutch Statistics Office (CBS) published second quarter GDP figures for the Netherlands. The Dutch economy expanded by 0.7% compared to the first quarter. Relative to the same quarter a year earlier the economy expanded by 2.9%. Growth has been around 3% in the Netherlands over the last two years or so.

Economic activity has been driven in part by fixed investments, such as real estate or machinery. These strengthened by 5.3% in comparison to the second quarter of 2017. Private consumption growth has been 2.2% over the same period.