The Cost of Living in a Politically Fragmented Europe

The Cost of Living in a Politically Fragmented Europe

Harshita Prashar
A woman walking in a supermarket, as price of groceries surges, Source: euobserver

Fight against poverty and social exclusion are EU citizens’ top priority at the moment, with support to the economy and employment opportunities a close second. These are the campaign topics they wish to discuss and address as Europe prepares for the formation of its next Parliament. Voters’ priorities seem to have shifted from their last electoral poll.

The end of the 2019 European elections marked the start of its polycrisis. Economic instability and inflation rates began to rise in 2021 when the world was recovering from the COVID-19 pandemic. However, the Russian invasion of Ukraine further exacerbated the situation, disrupting supply chains and pushing many countries, specifically Europe, to the brink of a crisis. Due to the unforeseen and continued existence of inflationary pressures, the prices of essential commodities such as natural gas, crude oil, coal, and food items such as wheat, maze, and edible oils were subjected to an unexpected surge. In Europe, increased energy prices were the driving force of high inflation. However, they were not the sole reason. Rising real profits in member states such as Italy, France, and Germany were not accompanied by a proportionate increase in real wages. Therefore, despite regulations and policies to support its citizens, both national governments and the EU have failed to satisfy them with their response. The EU’s failure to effectively tackle the rising inflation, housing, and job crisis is down to the extreme polarisation of the policy issue and a divided approach to solving the problem.

Women protesting against the cost-of-living crisis, Source: Corporate Europe Observatory

Polarised Political Spectrum

Polarisation of policy issues has been at the core of European politics and for many years now, the right-wing parties have capitalised on economic crises. They have been successful in amplifying negative emotions and nationalistic sentiments in the citizens, thus gaining popularity and support on this issue.

  • Firstly, it is due to the relationship between the radical right and economic insecurities. Studies indicate a positive correlation between the two, suggesting the rise of right-wing parties’ percentage votes can be attributed to a fall in GDP and a rise in unemployment across Europe.
  • Secondly, owing to the parties’ nationalistic as well as Eurosceptic affiliations, they blame immigrants as the reason for driving up costs for the native citizens.
  • Thirdly, the rhetoric used by these parties is populist, often positioning themselves as ‘common people’ challenging the elite political and economic class. The simplicity and directness of the promises they offer make them appealing to voters who are frustrated with complex and slow-moving policy solutions from mainstream parties.
  • Fourthly, the political landscape of many countries, such as Hungary and Poland, has altered from the traditional party systems to the right-wing, leading to fragmented and polarised parliaments. 

Divided Economic Vows

When it comes to the ongoing economic difficulties, ideological groupings have different ways of handling the crisis. The right wing of the European Parliament includes the central-right European People’s Party (Christian Democrats/EPP), the hard-right European Conservatives and Reformists (ECR),  Renew Europe, and the newly formed Nationalist Party, Identity and Democracy. EPP argues for ‘European competitiveness’ as its market suffers from global inflationary pressures. The party wants to fight overregulation. Similar to the EPP, the ECR also advocates for reinforcing the single market, slashing red tape, bringing innovation in technologies, and supporting energy security. Renew Europe emphasises investment, especially in the SMEs, echoing the vows of similar ideological groups. The parties of the right signal their compatibility with a joint emphasis on competitiveness and a single market. These parties, however, are divided on non-economic issues such as foreign policy, environmental strategies, social issues, healthcare, and education. 

MEPs Morten Løkkegaard and Valérie Hayer present Renew Europe’s ten-point plan Source: Renew Europe

The Progressive Alliance for Socialists and Democrats (S&D) takes on a different approach to the issue. S&D’s agenda is a new Green Social Deal, mitigating climate and social matters through tackling the energy crisis. This view aligns with the Greens’ focus on green investment, which sought to ‘inject’ profits of fossil fuel companies as investments in green projects. 

For the Left group in the European Parliament (GUE/NGL), increasing inequalities, tax evasion, and the lack of adequate investment in public services are the three most important issues to tackle. The group addresses social insecurities and inequalities through public investment and green transitions.  The European left also supports introducing a European tax on the rich. All this would mean a major transfer of economic power to the European level. The Eurosceptic orientation of the European left is committed to deleting the rules of the Stability and Growth Pact to increase social and environmental spending and counter cyclical fluctuations. 

A solution to the crisis

It has been four years since the cost-of-living situation escalated, yet prices continue to rise. According to the European Central Bank, inflation for the euro area will likely average 2.6% in 2024 against the ECB’s 2% target. People are unhappy with their current living conditions. While a new Parliament seems like a beacon of hope, the issue of this economic crisis is not confined to a single legislative body. The solution lies not in the hands of a single ideological group but rather an amalgamation of all of them. 

Recommendations :

  • Political parties should set aside their partisan differences and approach issues like the cost of living crisis with a unified purpose and perspective, integrating all their ideas into one policy.
  • A dedicated EU Multi-Stakeholder Forum, representing various interests and constituencies, should be established and focused on fostering economic progress and social well-being.
  • To mitigate the cost of living crisis, parties need to have a long-term vision. This will not only characterise their commitment to future generations but will also uphold their democratic responsibilities.

Suggested readings:

  1. “How Will Europe’s Cost-of-Living Crisis Impact Political Stability?.” The Soufan Center, 2023
  2. “Europe shaken by wars, climate change, economic crisis and class polarisation.” Committee for a Workers International, 2024
  3. “Tackling Europe’s cost of living crisis.” Institute of Economic Affairs, 2023

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The Cost of Living in a P…

by Harshita Prashar time to read: 4 min