The continued electoral success of the populist Right in Europe, UK and the US creates questions for all institutions, companies and investors. What is surprising is none of them are asking those questions or if they do come up with wrong answers.

The critical area of complexity is not the economy, but culture.

Donald Trump is ahead in the polls in the US, in part due to President Biden’s apparent decrepitude. Marine Le Pen’s National Rally movement is currently the biggest party in the first round of elections to the French Parliament and is echoing the successes of her “allies” in the Netherlands and Italy.  And in the UK, Nigel Farage’s Reform Party may only win a few MPs in Thursday’s election, but they will gain sufficient votes and make enough noise to be a thorn in the side of Sir Keir Starmer’s Labour government.

Economic variations

When it comes to economic policy, the populist Right actually varies, in certain respects, between countries. Trump’s tax policies are more conventionally libertarian and include making his previous tax cuts, which expire in 2025, permanent. He has said he wants to cut back on the renewable subsidies from the Inflation Reduction Act and raise tariffs.

In France, Marine Le Pen advocates what, to Anglo-Saxon eyes, is a form of economic national socialism. This includes reversing President Macron’s welfare reforms and lowering the retirement age back to 62.

In the UK, Nigel Farage’s programme is more closely focused on lowering taxes by, for instance, raising the personal allowance to £20,000. But he has big-state measure of his own, such as raising £35bn from abolishing interest on bank reserves held at the Bank of England, spending more on defence and nationalising a 50 per cent equity stake in all utilities. However, he is at least notionally committed to substantial cuts in state expenditure, notably welfare.

My personal rule of thumb is that populists in power, of whatever hue, risk bond market turmoil and higher interest rates. A re-run of Liz Truss. From a macro-economic and investor standpoint, the modern soft Left may sometimes be preferable.

A Passive Cultural Revolution

What unites the populist Right internationally is a conservative view of culture. By this, I mean reducing immigration substantially and reversing “woke” measures in schools and workplaces. On Sky News yesterday, Nigel Farage said he wants “To stop white kids being taught to hate their own culture and to stop black kids being forced to think of themselves as victims all the time.”

What is not commonly appreciated is the view that culture comes first is actually held on the Left too, but with the opposite intention. Labour’s manifesto promises a new Fair Work regulator, the implementation of socio-economic duties across the private sector, and a new Race Equality Act. If Labour wins a large majority, its more left-wing backbenchers will push this radical agenda very hard. Many of these backbenchers will be unknown to the wider public, and will have little else to do.

The Italian Marxist philosopher Antonio Gramsci argued that the Bolsheviks were wrong to believe economic measures would create a classless society. He advocated that only by controlling the culture, and destroying or undermining the precepts of Western Civilisation, would communists achieve their revolutionary objectives. Gramsci called this “the Passive Revolution”.

To this, both the Left and now the Right say: hold my beer.

Bannon in the Clink

Today, Steve Bannon, the ex-Goldman Sachs partner and chief of staff to Donald Trump, begins a four-month term in prison, having been found guilty of contempt for refusing to testify to Congress over the January 6 insurrection. Over the weekend, he gave an interview in which he said that America is engaged in the third great war. The first was the Revolutionary War against the British; the second was the Civil War; and the third is now, the culture war for America’s identity. There will be no compromise, he said. One side will win, the other annihilated.

Corporate repercussions

As of next week, starting in Britain and then moving across Europe and to America, corporates are going to find themselves right in the firing line. They will be stuck enforcing complex, often nonsensical rules on workplace equality, environmental standards and governance on the one hand and a revolt by the Right on the other.

Most of them have no idea what is coming.

Instead, they examine the false certainties. Will Labour raise taxes? Yes, in certain annoying personal respects. The truth of the matter is that, initially, we should expect broad fiscal stability under Labour and a gathering economic recovery, driven by falling interest rates and renewed investor confidence in the UK.

The controversy is going to come in relation to Passive Revolution measures, pressing yet more equality or climate legislation on companies, accompanied by a furious backlash from the Right. These proposed measures are going to be radical and provocative. If they are not careful, all corporates are going to feel like NatWest, having foolishly cancelled Nigel Farage’s bank account.

It is no use saying that it can be ignored. The populist Right is more animated and has more money and more data than the Left. It is also advantaged because it has a deliberate programme that those in the media, universities or boardrooms largely ignore or don’t understand. Nor do they recognise that it is based on genuine, experienced grievances.

Real life

Standing on the station platform the other day, waiting for a 40-minute delayed train, I fell to talking with some fellow commuters. I was surprised by how many hinted that they might vote Reform. Why? None of them mentioned Brexit. I doubt they themselves share the objectionable views some Reform candidates have given.

Instead, they cited their kids being supposedly discriminated against in education or work applications on grounds of class or race. A long litany of applications, to law firms, medical schools and even the Army were rejected “by the HR bots”. The election is a chance to protest.

Reform is a data machine with information on millions of supporters, and next week it will probably have more MPs, determined on their own long march through the institutions, starting with demands for proportional representation and reform of the House of Lords. Like the Left, it will be ready to deploy the lawyers.

My advice on the culture war is don’t do anything stupid to upset people and keep the ideologues away from the levers of power. Listen to what people are saying. Be reasonable and pre-emptive. An incoming Labour Government; the acquis of EU law; the legacy of the Biden presidency, might create the illusion that a sort of centre-left legal settlement is permanent and growing, but there are some who don’t see it that way and they are fired up, ready for battle, across the West. Common sense is a valuable commodity in boardrooms, as it is anywhere else.

George Trefgarne is CEO and founder of Boscobel & Partners, an independent communications and political consultancy