EU parliamentary election tops Europe concerns for CEOs in Davos

Wed Jan 22, 2014 9:26am EST
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By Paul Taylor and Paul Carrel

DAVOS, Switzerland (Reuters) - The risk of a lurch to the right in May's European parliamentary election is vexing top global chief executives, who worry that the vote will make the bloc harder to govern just as they want it to reform.

High unemployment, austerity fatigue and still anemic growth offer the perfect backdrop for fringe parties to prosper at the election.

Some pundits predict a group of anti-euro parties including the National Front in France, Britain's UKIP, Syriza in Greece and the Dutch Freedom Party could capture 20 percent or more of the seats.

That could pressure the European Union's main party groups to tack right and challenge Europe's ability to integrate further, given new powers the parliament will have to rule on the majority of EU legislation.

For CEOs at the annual gathering of the global elite in Davos, the May election looms as a big risk for Europe's economic outlook even if a euro zone break-up has been averted.

"True tail risk has disappeared. However there is a risk that there may be some risk coming back this year," Axel Weber, UBS UBSN.VX chairman and former Bundesbank president, told a session at the forum on Wednesday entitled "Is Europe back?"

Weber cited potential gains by Eurosceptics in the elections as a risk, which he said could complicate the political process in the EU. "Just think of how the Tea Party has made governance difficult in the U.S."

Recent polls show France's anti-immigrant National Front has gained support since the 2012 presidential election in which party leader Marine Le Pen came third with 17.90 percent of the vote, the best first-round score in its history.   Continued...

Participants break for lunch between sessions during the annual meeting of the World Economic Forum (WEF) in Davos January 22, 2014. REUTERS/Ruben Sprich