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Populist governments struggle with the virus

Populism has, so far, had a mixed pandemic. Established parties have seized the opportunity to claim the populists in power were insufficiently attentive to expert advice.

Populism has, so far, had a mixed pandemic. Established parties have seized the opportunity to claim the populists in power were insufficiently attentive to expert advice.

Charles Stanley

in Features


The opponents of Donald Trump in the US and of President Bolsonaro in Brazil point out how their wish to ignore the virus or to keep their economies going represents dangerous policy which can increase the chances of a bad outcome in the battle against the pandemic.

These two large countries top the lists for total deaths, proving to their critics that the World Health Organisation (WHO) knows best. If you adjust for deaths per million, the picture is less clear with some European countries that did lockdown showing worse results so far than the US, though they would argue their rates have now fallen away.

The pandemic has become politicised, with parties of the left and conventional centre-right backing WHO advice, following caution and regarding stopping the spread of the virus as the overriding necessity. The populists are reluctant to take people's freedoms away, keen to keep economies functioning and more dependent on possible drug treatments and hygiene regimes for their handling of the disease. It has become a new battle in the long war between the global rules-based system and the unconventional politicians.

Bolsanaro still popular

Looking at the polling, Mr Bolsonaro has stayed in a lead position despite the endless rows and the obvious stresses in fighting the virus in Brazil, which worry investors. Members of the government have resigned and the president is involved in more acrimonious disputes with the judiciary. Political risk is back on the agenda with concerns about the direction of economic and budget policy. Mr Trump has suffered a little in the polls and is now a steady 10% rather than 5% behind his Democrat rival. Ironically, some of the disappointment with Mr Trump is not over his handling of the virus, but his failure to quell the riots and demonstrations that have broken out this summer in the US, which his supporters condemn.

In Europe, the picture is mixed. Germany has succeeded so far in having a low incidence of serious cases of Covid-19. The German health service is also thought to have coped well with the cases they did encounter. The government of Angela Merkel has shot up in the polls, overcoming the poor position she was in prior to the crisis. The AfD, Germany's Eurosceptic populist opposition, have lost a lot of ground, with the Greens also losing a bit. It makes a solution to the Euro troubles caused by the recent German constitutional court more likely.

In contrast, in Italy, which suffered from a bad attack of the virus and from a lot of collateral economic damage, the parties of the populist right have recorded large advances in support. Lega, which left the government in protest over its acceptance of Euro austerity, still leads. The more radical Fratelli party have seen the biggest surge. Forza, a populist-tinged version of the old Christian Democrats is still only on 7%. Along with Forza, the populist right now polls 60% support, with Lega and the Brothers above 50% together.

In France, Marine Le Pen of National Rally is outpolling Emmanuel Macron by a small margin but on a second-round ballot, she would still lose according to the surveys. There are few signs of a revival by the Republicans or Socialists, the old centre-right and centre-left parties. In Spain, the populist challenges from Vox and Podemos have faded.

Populism has, so far, had a mixed pandemic. Established parties have seized the opportunity to claim the populists in power were insufficiently attentive to the world expert advice on how to tackle the virus. They will seek advantage out of alleged failings visible in the scale and duration of the pandemic where different policies were followed. The populists will claim the world establishment did too much economic damage, especially to the lower paid and self-employed groups who often support their case for change. They will also argue the world establishment did not itself handle the epidemic well.

Anti-vaxxers and privacy

Populists often support the wider adoption of existing drugs which they think could help patients, and oppose what they see as a move by global big government to impose vaccinations and trace systems on people. They campaign for an old-fashioned, wilder kind of liberty, against global institutions and governments with big money and big computers seeking to know where everyone is, who they are meeting and where they are going in the name of curbing the virus.

It is said the winners write the history. We do not yet know who the winners will be in these distressing battles. There will doubtless be numerous enquiries into the handling of the pandemic country by country, and maybe in a wider global context as well. Balanced accounts will need to weigh the conflicting impacts on health and the economy, and above all to reach clear findings on what in retrospect would have been the best way to contain or defeat the virus.

Markets will continue to be divided in their appraisal of populist governments and oppositions, as there is no simple pattern or safe conclusion. So far, Mr Trump's tax cuts have been popular but his trade policy unhelpful. His virus policy hangs precariously in the balance, with judgement probably now resting on how much worse the pandemic gets.

Polling suggests more people think he is good for jobs than his rival but his general rating is lower with more concerns about his approach to the pandemic and other policies. Mr Bolsonaro has presided over strong bull phases and big bear market corrections. The market outcome rests more on how long the restrictions last, as well as the continuing supply of cash from central banks. The Fed is working closely with the Administration. The Brazilian Central Bank has in recent weeks also been keen to get on with cutting interest rates and offering some monetary loosening. The flow of money is with incumbents but so too is the health damage wrought by the epidemic.

Nothing on this website should be construed as personal advice based on your circumstances. No news or research item is a personal recommendation to deal.

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