Poor global prospects fuel growing nationalism

The two largest political surprises in 2016 were Brexit and the election of Mr Donald Trump. The persistent economic weakness in most advanced economies for much of the last decade, a growing income divide between the ‘haves’ and ‘have nots’, and in particular the shrinking fortunes of the middle class (Chart 2) led many households to question established assumptions on issues including free trade, fiscal austerity and immigration. Each of these factors contributed to the UK voting to leave the European Union and Americans supporting Mr Trump.

The recent impeachment of president Park Geun-hye in Korea is another example of a disenfranchised middle class who are frustrated with the growing inequality in society. Allegations of corruption and nepotism have caused public outrage, particularly when four in every five middleclass Koreans feel poor.