One step back in Italy, one step forward in Austria

Turning the populist tide will not be achieved by waiting for it to pass

One step back. One step forward. An Italian tarantella and a Viennese waltz combined in the latest round of Europe's "Strictly Coming Apart" – but is it Austria or Rome which is out of step here?

Sunday's No on Prime Minister Matteo Renzi's constitutional reform, and the defeat of far-right Norbert Hofer in Austria's rerun presidential are being read as indicators of the supposedly irresistible march of far-right populist/anti-establishment politics in the wake of Brexit and Trump. Austria's vote suggests the momentum may be beginning to stall, while Italy's, that there is still a fair wind for it.

With French and German elections scheduled for next year, and possibly Italian elections, in all of which the far-right parties will play a key role, could this runaway train even yet put the future viability of the EU in doubt?

And yet it has been a feature of the rise of populism across the continent that, although strong, it is manifest in very different political forms . Not least on the future of the EU.


Hofer's Freedom Party, established by ex-Nazis, is sceptical of Europe, but he has stopped well short of calling for Austria to leave the EU and has refered to what he said was Britain's "tragic" vote to leave. He was also backed by most of the strongly pro-EU conservative People's Party.

While Italians in the referendum may have embraced the strong anti-Renzi message of Eurosceptic Bepe Grillo’s Five Star Movement and of the far-right Northern League, it is unlikely either party, even after a successful election, would produce a majority for a referendum on euro membership, let alone see it passed. Both, however, were yesterday demanding elections, confidently predicting they will be in the next government.

Renzi’s mistake was not so much to propose overambitious constitutional reform – Grillo promises the same – but to stake his own fate on an unnecessary poll. Like Irish politicians he is learning that voters are capable of voting in referendums on any issue preoccupying them rather than that on the ballot paper.

But that message is sinking in: “The ‘no’ won in an incredibly clear way,” Renzi said yesterday, letting off a broadside at the EU and German-imposed economic austerity. But it is a message that EU leaders would do well to heed – turning the populist tide will not be achieved simply by waiting for it to pass.

But it is important not to overstate the likely impact of Sunday's polls. Arguably, Italian politics have simply returned to their default position of instability, legislative gridlock, and inability to reform – and that, after all is an Italy we have all lived with since the second World War.

The markets fell yesterday, then rose again, unsurprised by the result. There is pressure on the banks, looking to raise around €20 billion in coming months – recapitalisation may more difficult, but the challenge is little different to that before the vote.