In recent years, we have witnessed a continuous rise of populist parties across Europe: in Italy, the Five Star Movement, Lega and Brothers of Italy; in Spain, Vox and Podemos; in France, Rassemblement National and La France insoumise; and in Germany, Alternative für Deutschland. In Italy, in 2014, they accounted for around 27% of support, while current polls in 2026 place them at 47%. In Spain, from 0 to 15%. In France, from 25% to 31%. In Germany, from 0 to 19%. We know that this spread is linked to distrust toward traditional parties, which are no longer considered capable of solving the economic crisis. But is the trust placed in parties calling for a change of establishment really the solution?

It is useful to begin with a definition of populism. Cas Mudde (2007), one of the leading scholars of the phenomenon, defines it as a thin ideology, based on only a few ideas, that divides society between the pure people and the corrupt elite. Between these two groups, there is a moral struggle between the good of the people and the evil of the elite. In the context of liberal democracies, in recent years, populist parties — opposed to this system — have been continuously rising. The third basic concept, in addition to the people and the elite, is the general will, opposed to the will of all. Drawing on Rousseau, the former corresponds to the ability to organize different interests and govern; the latter, instead, represents only the sum of different interests. Obviously, politicians should follow the general will, and populist politicians claim to be the only ones doing so, while strongly criticizing traditional politicians who, following an aristocratic pattern, treat citizens passively. This is the ideological foundation.

From an economic point of view, therefore, the main principles aim to help the “people”, with protectionism and economic nationalism opposed to globalization, which is considered the cause of the loss of popular power. An analysis by the Kiel Institute, one of the most important think tanks in the field of international economics, can help us fully understand the economic impact. As they note, the element that characterizes populist parties on both the right and the left is the use of this hatred toward the corrupt ruling class. At the economic level, this translates into a weakening of the country’s economy, since, as promised, they go against the law and political systems of control, ultimately making life even more difficult for the “people” they claim to defend. Right-wing populist parties focus on ethnic and cultural differences, accusing the elites of siding with migrants rather than with the real “people”. On the left, instead, they attack financial elites as “plunderers” of the people’s resources. Their analysis identified a pattern: on average, after 15 years of government, GDP is 10% lower under a populist government than under a non-populist one. The reasons? Protectionism, pursued through nationalist rhetoric that leads to the imposition of tariffs and barriers to international investment. Secondly, the fact that they go against the law, weakening democratic institutions without any concern. These elements have a negative effect on economic growth, because democratic institutions serve to protect against arbitrary interventions and to encourage investment and free trade. As a result, populist parties can only try to be demagogic and convince people that they help the economy, but the data show the opposite.

Furthermore, as shown by a further analysis by Brzozowki and Gorzelak (2025), the presence of populist governments is associated with a higher spread on national bonds and, consequently, financial markets consider them as bearers of risk. However, if strong fiscal safeguards are in place, the situation improves; when they are weak, the presence of populist parties increases the spread by 7 points for every 10% increase in the seats they hold in parliament, while when they are strong, the spread increases by only 3.8 percentage points. Therefore, the victory of a populist party entails fiscal costs and a negative impact on the economy. Indeed, as Locatelli (2026) notes, in recent years there has been a continuous depoliticization of European fiscal policy, which may have been at the root of the rise of populist parties: because of ever-growing debts, increasingly technical fiscal rules were introduced so that there could be no political criticism. But this created another kind of disagreement and controversy, and this technocratic system of governance allowed political actors to challenge the laws, calling for a simpler system, with the populist response proving to be exactly that.

But let us consider cases both on the left and on the right in which this has happened and in which it has not. In Italy, for example, there is strong populist pressure, with a government clearly belonging to this tradition that remained in power for two years, Lega/Five Star Movement, but there are strong institutional constraints linked to the EU and a more structured Constitution. As a result, the break with the establishment and economic collapse did not occur; however, there was no growth either. In Hungary, instead, after Fidesz, Viktor Orbán’s party remained in power between 2010 and 2026; populist pressure, due to weaker safeguards and defense mechanisms, had a more marked impact: indeed, initial growth, on the wave of optimism, was positive, but from 2020 onward recession and stagnant growth alternated. And the spread, supporting the theory outlined above, also increased. For comparison, the German Bund is taken as the benchmark with a spread of 0. In Italy, it went from around 100–200 in 2020 to below 100 today. In Hungary, instead, from 100 to 450. Consequently, financial risk clearly has a connection with the type of government, populist or not, although national safeguards and the connection with the EU also have an impact.

Let us now consider Spain and Finland, with two governments, respectively centre-left and centre-right, but of a more traditional, non-populist nature. Spain recorded higher growth, between 2% and 3.5%, with a spread between 90 and 110, while Finland recorded lower growth, between 0% and 1%, with a spread between 20 and 40. It therefore seems that the solution proposed by populist parties, namely simply changing the establishment, has not yet been confirmed by the facts and does not lead to immediate growth, since institutions and the macroeconomic context remain the most relevant elements, and populist experiments have so far largely failed.

By Tommaso Prever