VoxEU Column

Deep recessions, large immigration waves, and the rise of populism

Populism has gained momentum over the past decade, dramatically changing the political landscape. This column explains how deep recessions and immigration waves have contributed to this recent trend and discusses the likely trajectory of populism.

Support for populism is growing in many regions and countries across the world. In the US, there are strong right- and left-wing populist movements led by President Trump and Senator Sanders, respectively. The same applies to the UK, with the pro-Brexit wing of the Conservative party and UKIP on the right and the leadership of the Labour party on the left. In continental Europe, more than one in four European voters (26.8%) voted for a populist party in the last national election – equal to the support for social democratic parties and double the support for liberal parties (Timbro 2019). 

Populism is a way of thinking about politics rather than a specific ideology, and is characterised by conflict between ‘the people’, who have a set of demands they believe are worthy of attention, and ‘the elite’, who are seen as unwilling to grant these demands (Judis 2016). 

In this column, based on a new CEPR Policy Insight (de la Dehesa 2019), I argue that the two main causes for the rise of populism are deep recessions and large immigration waves, which create social anxiety and highlight the apparent failure of current political norms to address people’s concerns. By attributing this negligence to a specific group in society, populists have mobilised supporters to bring about political change. 

Deep recessions

On 24 October 1929, known as Black Thursday, share prices on the New York Stock Exchange collapsed, resulting in the Great Depression, the largest and longest recession in the history of the US. 

The Great Depression was the key social issue of the 1932 presidential election, and contributed to the victory of Franklin D. Roosevelt, America’s first populist president (Leuchtenburg 2019). Roosevelt gained public support through his “New Deal for the American people”, a programme for economic recovery that involved the federal government providing aid and undertaking public development projects (Levy 2011). Roosevelt argued that prosperity relied on plans “that build from the bottom up and not from the top down, that put their faith once more in the forgotten man at the bottom of the economic pyramid” (Alter 2006). The popular appeal of his radical ideas granted him a landslide victory over the incumbent, Herbert Hoover. Under these strongly populist themes, he was able to remain in office until his death in 1945 – the only president to have served four terms.

Populism also gained greater political representation in many countries after the 2008 Global Crisis, particularly in the EU, where some EU countries are still struggling to recover (Skidelsky 2017). 

In Spain, one of the worst hit countries, a newly created radical-left populist party, Podemos, emerged in response to the social unrest and dissatisfaction caused by the crisis. Podemos’ anti-establishment and anti-elite stance focused on how the corrupt elite (‘la casta’) ruined the Spanish economy by exploiting ordinary people, and emphasised the need to take back national sovereignty from unelected actors (such as the ECB). Podemos rapidly gained support, especially among highly educated citizens experiencing economic insecurity, becoming the third largest party in the 2015 general elections with 21% of the vote (Ramiro and Gomez 2016).

Elsewhere in Europe, populist parties experienced a post-Crisis surge of popularity, and currently have strong representation in 11 out of 33 European governments (Timbro 2019). This trend is fuelled by beliefs that established parties have failed to solve social issues, and a sense of disenfranchisement (Bröning 2016). 


Ferguson (2016) argues that rising immigration can lead to greater support for populism. In the US, the percentage of the American population that is foreign-born almost tripled between 1970 (4.7%) and 2014 (13.7%), with Mexican-born immigrants constituting a substantial proportion of this recent growth (Migration Policy Institute 2018).

It is thus easy to see why Donald Trump’s 2016 election campaign targeted Mexican immigrants, particularly undocumented immigrants, claiming that a crackdown on immigration was necessary to “make America great again”. During his campaign, he referred to Mexican immigrants as “rapists and criminals” and promised to build a “big, beautiful wall” along the Mexican border (Trump 2015). Evoking nostalgia for America’s past greatness partly explains why a large proportion of Trump’s supporters were white (especially those without a college degree), male, and older (aged 65 and above) (Tyson and Maniam 2016). 

Since Trump’s election into office, his administration has revised many immigration policies to make it more difficult for refugees and asylum-seekers to enter the US, increased immigration enforcement, and making the visa application process lengthier and more stringent (Pierce et al. 2018). Reducing the inflow of workers is likely to harm America in the long run, as the ageing population is expected to put strain on the Social Security system and shrink the relative size of the workforce. According to the IMF, advanced economies such as the US should instead be encouraging the entry of migrant workers (IMF 2018).

The future of populism

Support for populism is likely to grow further because of continued economic uncertainty and the possibility of another severe recession.

In 2018, the global level of government debt was 80% of total GDP, nearly double its pre-crisis level (Fitch Ratings 2019). Most of this debt is concentrated in Europe and North America – areas where populism has gained traction. In some countries, government debt has reached unsustainable levels: in Greece, for example, government debt is currently 174% of GDP (IMF 2019). Besides raising concerns about the government’s ability to repay its debt and the possibility of default, such high levels of debt make it more difficult for governments to react to economic shocks. Reducing the amount of debt may require austerity measures, which could push the country into a recession. 

Well-run central banks can help stabilise a country’s economy, but upcoming changes to top management in major central banks create uncertainty over who the new leaders will be and how well they can manage the bank. By the end of 2019, the ECB will no longer be under Mario Draghi’s capable leadership, and half of its executive board members will be replaced. In 2020, if Donald Trump is re-elected, he will likely replace the chairman of the Federal Reserve and nominate two new governors to the Federal Reserve Board. Monetary mismanagement can amplify the depth of recessions, which then garners support for populism. 

Recent events have also raised concerns about central banks’ ability to remain independent of politics. In the US, President Trump threatened to fire the chairman of the Federal Reserve for not cutting interest rates and nominated two of his “unqualified cronies” to the Federal Reserve board (The Economist 2019). India’s government has also replaced a capable central bank leader, who was unwilling to cut interest rates before an election or transfer money from the central bank to the government, with someone who was willing to do so (Kazmin 2019). The European Central Bank has faced court challenges over the legality of its unconventional policies, but fortunately was found to comply with EU law (Jones 2019). 

The consequences of huge government debt and the politicising of monetary policy are likely to be increased economic instability and the potential for another severe recession - which means that in the near future, populism is here to stay.


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