18 September 2019


25 September 2017

Winds of Change

Two elections on different sides of the world showed a striking resemblance in the way people voted

New Zealand and Germany both held elections over the weekend, and despite being on opposite sides of the world, the results showed a striking similarity in voters’ preferences at present.

Angela Merkel may have held on for a fourth term in office in Germany, but her party lost considerable ground to the right-wing populist Alternative fur Deutschland (AfD), largely on the strength of the latter’s continual attacks of Merkel’s decision to allow thousands of refugees into the country as they escaped the war in Syria.

Meanwhile, in New Zealand, the result has left only one thing for certain: the right-wing populist New Zealand First (which also stood on an anti-immigration platform) will be a junior member in whatever coalition is eventually formed.

This, of course, should surprise no-one. Over recent years, from Brexit to the US presidential race, right-wing populism has played on people’s fears over immigration to make sometimes remarkable and unexpected gains in the polls.

However, for the infrastructure industry, questions remain over what these latest results will mean for the market.

Both Germany and New Zealand have been open to PPPs over recent years – with New Zealand in particular forging ahead with a number of schemes across the board. But there are now concerns over what this election will mean for all that progress, as the suggestion is that the National Party’s opponents are largely against the PPP concept.

Similarly in Germany, there is an air of uncertainty hanging over the election result – even though the continued presence of Merkel at the helm will be welcomed by many in Europe as a steady hand on the tiller at a time when the EU needs it most.

AfD’s success in the poll means that Merkel will have a difficult time making any bold decisions, as they are likely to come in for criticism from the populist right wingers.

Furthermore, with Merkel likely to have to do a deal with the Greens to get a majority in the Bundestag, wide ranging investment in transport projects, for example, could be the subject of internal wrangling in any coalition.

It is often said that investors hate uncertainty, which would normally suggest that the outcomes of both the German and New Zealand elections will result in investors turning away from their countries for the time being.

However, with uncertainty abounding around the world at present, the damage may not be as significant as some may fear. Germany, for example, will remain a leading light in the European project for the foreseeable future – and in many ways is a much more stable and certain environment than the UK at present, with clear fault lines emerging over what ‘Brexit’ will look like in practice.

This certainly seems to be behind ratings agency Moody’s recent thinking, after it downgraded the UK to Aa2 from Aa1, on the back of both Brexit uncertainty and a slowing economy.

While at one time, this move would have been met with plenty of hand-wringing and concerns that the UK may lose its lustre for investors, the current state of global politics and finances means that it is likely to have less of an impact today.

2017 was always going to be an intriguing year – not just on the back of the surprises of Brexit and Trump’s presidential victory in 2016, but also because there were so many important votes taking place around the world (some scheduled, like the French presidential election, some not so, like the UK election).

Now that we have largely come through all that, the hope has always been that things may start to settle down and politicians can deliver some of their visions – including getting back to the basics of new infrastructure.

Unfortunately, as the German and New Zealand election results show, the politics of populism is likely to play a growing part in when and if such visions can be realised. And that could further slow down the whole process.



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Winds of Change


Two elections on different sides of the world showed a striking resemblance in the way people voted

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