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ECB: Populist surge is bad for business 

May 26, 2016

Aleksandra Eriksson, EU Observer

The European Central Bank warned that the rise of populist parties could threaten growth in the eurozone.

The bank describes a need for fiscal and structural reforms in most of the area’s 19 member states. But those have currently lost momentum because of better short-term economic conditions as well as rising political risk.

”While deeper structural reforms would bring long-term benefits by boosting growth potential without endangering fiscal solvency, political risks – having increased for almost all euro area countries since the onset of the global financial crisis – appear to be increasingly interfering with reform implementation,” the bank wrote in the latest Financial Stability Review, a bi-annual report that was published on Tuesday.

”Rising political risks at both the national and supranational levels, as well as the increasing support for populist political parties which are seen to be less reform-oriented, may potentially lead to the delay of much needed fiscal and structural reforms and cause renewed pressures on more vulnerable sovereigns.”

The report came a day after far-right candidate Norbert Hofer lost a bid for Austria’s presidency to Green candidate Alexander Van der Bellen by a mere 31,000 votes. Read more

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