The rise of the Sweden Democrats has parallels in its Nordic neighbors. In Denmark, the anti-immigrant Danish People’s Party saw its heyday in the early 2000s and pushed Denmark to adopt one of the harshest stances on immigration in the European Union, including policies such as confiscating excess cash from asylum seekers claiming benefits in the country.

As its support has collapsed spectacularly in recent years, other groups have tried to fill the gap, including the Denmark Democrats, established in June by Inger Stojberg, who was convicted for illegally separating refugee couples when she was immigration minister in 2016.

Similarly, in neighboring Norway and Finland, anti-immigrant parties had already seen large gains in earlier years. Support for Norway’s Progress Party has slid after peaking in 2005 and 2009 parliamentary elections, and the Finns Party had its first big victory already in 2011. Arguably, their popularity has rubbed on the mainstream parties, who have sought to appeal to uncertain voters by sharpening their policies.

Elsewhere in Europe, nationalist Marine Le Pen posted best ever result in France in May and big gains in parliament. Far-right Brothers of Italy are set to take power in Rome after this month’s election, and in Slovakia, pro-Russian parties are on track to take power as soon as an early election is called. 

The UK’s governing Conservative Party chose hardliner Liz Truss to succeed Boris Johnson this month after she endorsed his controversial plans to deport undocumented migrants and signaled her willingness to revive tensions with the EU. Truss though will also maintain Johnson’s strong support for Ukraine.

Eoin Treacy's view

European cohesion was born from repulsion at the thought of war on the continent and enthusiasm at the prospect of growing prosperity through trade. That culminated with the creation of the Euro at the same time China’s entry into the WTO eviscerated European low skilled manufacturing.

The loss of manufacturing jobs was papered over by dispensed Germany’s interest rates to the entire Eurozone. Credit availability fuelled building booms on an historic scale across the periphery and leverage reaching problematic heights. The credit crisis was not only a banking issue. It exposed the deep scars left by globalization on living standards of millions of people.

Strict fiscal consolidation in the aftermath of the sovereign wealth crisis soured sentiment towards the European project. People are also now living with the result of idealistic energy policy over the realities of dependence of foreign powers.

The parallels on the ground for nationalists are obvious. In both the economic and energy cases, countries took their lead from bureaucrats in Brussels. In both cases, the results have been disastrous for large numbers of voters. That emboldened populism and anti-cohesion parties all over Europe. The big question for central planners is whether the European project can survive without abundant credit availability. It appears the border of tribalism rests at the willingness of the EU to spend. The only way the Euro can survive is with a formal system of transfers to less well-off regions and countries.

The currency is currently unwinding a deep short-term oversold condition relative the Dollar. A break in the sequence of lower rally highs will be required to question the medium-term downtrend.