By Nick Redman
A Covid hangover combined with more persistent economy-sapping problems are likely to see governments in the West losing power in elections across 2025, just as they did last year. And unless incumbents manage to tackle the root causes of incumbency curse, it could be around for some time.
All the signs are that administrations in Canada, Germany, Central and Eastern European countries, and possibly Australia, will share similar electoral fates as those of South Korea, France, the United Kingdom and the US – all defeated at the ballot box in 2024, a year that witnessed an unprecedented number of polls around the world.
Voter disquiet over economic issues, seized upon by many resurgent populist and conservative opposition forces, were key to bringing about the changes in leadership last year and will most probably determine the outcome of ballots over the course of the coming months, possibly even those scheduled for early next year.
Governments opened the fiscal spigots in 2020 to get their countries through the pandemic. Few got the electoral benefit for doing so. They have since struggled to claw back the debt, which has slowed recovery and worsened deeper economic ills, such as sustained sclerotic growth and productivity that has plagued western countries ever since the global financial crisis.
At the same time, a surge in inflation, driven by Covid-era supply chain disruption and the Ukraine war-generated energy crisis, exacerbated cost-of-living grievances and longstanding immigration concerns – for which incumbents, many long in power, and looking weary if not exhausted, had little answer.
Populists put incumbents on backfoot
Untainted by spells in government during high inflation, parties of the right could credibly advance agendas that largely spoke to these concerns, including calls for an end to the Ukraine war, big curbs on immigration and stopping the dash to decarbonise. The solutions, though untested, put incumbents on the backfoot, and made them look ineffectual. Ultimately, this contributed to their demise. And could be their counterparts’ undoing this year as well.
In Germany, a very unpopular Social Democrat-led government appears on the way out, with the economy in the doldrums. In Canada, the long-in-the-tooth ruling Liberal Party is set to be taken to the woodshed by voters, having overseen a very difficult few years. Opposition parties of the right are forecast to get the most votes in Norway’s election. The country most likely to buck the trend is Australia, where the governing Labor Party might survive – but it will be a close-run thing.
In elections across Central and Eastern Europe, anti-establishment and Ukraine-sceptic parties pose a serious challenge to incumbents. While the latter won’t always lose, they may see their vote share decline significantly, causing administrative instability and cohabitation troubles in the region’s governing coalitions.
Following last year’s allegations of Russian interference, a re-run of the Romanian presidential elections could see victory for a controversial right-wing candidate, even after his surge in popularity in last year’s poll led to its annulment. A presidential ballot in Poland, meanwhile, is too close to call. If the reformist government cannot win, it will be hamstrung. And in parliamentary elections in the Czech Republic and Moldova, right-wing opposition parties are expected to win in the former and come close to doing so in the latter.
The flagging electoral fortunes of western governments, so manifest last year, look set to persist this year because incumbents are struggling to revive economic growth. They got no credit for shielding their countries from the worst of the pandemic. And when inflation surged, Central Banks could only respond by seeking to suffocate demand through higher borrowing costs, alienating voters. They couldn’t tackle the causes of inflation by boosting the supply of grain or gas.
Over the course of 2025, the Covid hangover will likely start wearing off – a little at least – possibly improving the electoral prospects of incumbents in polls later in the year. But not by much. That’s because residual structural problems of low growth and productivity show little or no sign of diminishing, exacerbated by the West’s ongoing demographic crisis. Low birth rates and falling fertility is reducing the pool of workers, which in turn is shrinking the tax base, putting a huge strain on finance ministries, already finding it hard to support ageing citizens.
The resort to immigration
Western governments have been looking to solve the workforce puzzle through technology – notably automation and generative AI – and investment in skills-based training. But, under pressure from perennially short-staffed industries keen on immediate solutions, most governments have resorted to immigration to boost economies. Populists and centre-right parties capitalised on social tensions over migrants in their electoral campaigns last year and will doubtless do the same this year.
In response, incumbents are being pressed to reverse course on immigration. Many already have. Some might prefer a pivot to smart, selective immigration, like the points-based system in Australia. But at the moment, it’s hard to find a European politician willing to make the argument for such policies, probably because the migrant issue has become too divisive. Even Canada is closing its traditional open door. Moreover, it’s not even clear that immigration is a GDP growth booster at present. Britain has received record numbers of migrants recently but is a growth laggard.
If immigration weren’t enough of a thorny issue, there’s another – decarbonisation. While the US under Trump has, once again, abandoned Net Zero, western countries remain committed to the target and their electorates are broadly in favour. But the process of decarbonisation can generate public resentment and opposition, if for instance it raises household costs (some renewable energy sources), causes inconvenience (ultra-low emission zones) or is seen to blight the landscape (onshore wind farms). Just as with immigration, stirrings of dissent are red meat to the populist right who oscillate between de-prioritisation to disavowal of decarbonisation.
As the Covid hangover eases over the course of the year, governments will still be left to deal with more structural economic problems, notably persistently low growth. Alert to the political perils of immigration, some have been exploring other means of re-energising their workforces. The UK is focusing on stemming economic inactivity. Japan has for some time tried to boost female workplace participation. While decarbonisation will ultimately boost economic expansion, some European governments are backpedalling on the greening of their economies, worried about costs and the reliability of renewable energy supply.
They are, it seems, a long way from resolving the growth conundrum. Not that the parties of the right challenging them at the ballot box are closer to doing so. Indeed, those that came to power in 2024 and the ones that do so this year, could in time face the incumbency curse that did for the governments they replaced.
About the Author
Nick Redman is the Director of Analysis at Oxford Analytica and Editor in Chief of the Daily Brief.
