In France, unencumbered by national office, Jean-Marie Le Pen staged a formidable upset in this year’s presidential elections.For Austria and Europe there will now be a period of considerable uncertainty. Mr Haider is certain to stir up tension between Austria and its eastern neighbours over the EU’s planned enlargement in 2004. Among the themes he will exploit are worries over safety at the Czech nuclear power station at Temelin, and over the post-war treatment of the Sudetenland Germans.Yet, Austrian officials insist that there will be no short-term threat to the EU’s enlargement talks. The key decisions will be taken at a summit in Brussels in October, before the Austrian elections, and at one in Copenhagen in December – after the poll but before a government will have been formed. Mr Sch?l will represent Austria, pushing a pro-enlargement policy.Only were Mr Haider to pull off an upset and return his party to government, would things look more sticky. All member states have to ratify treaties of enlargement, Austria included.So everything now hinges on the charisma and campaigning skills of Mr Haider.Yesterday’s party meeting anointed him leader although – for tactical reasons – the job of “leading candidate” in the elections is expected to go to the social affairs minister Herbert Haupt. This provides a potential scapegoat should things go wrong in the election and might open up more post-electoral coalition possibilities.The People’s Party has not ruled out the possibility of reforming its alliance with the FPO (although to do so, having found them impossible to work with, might look a little perverse).

Other possibilities include victory for the socialists (who are now riding high in the polls) or a coalition with the Greens – or a return to a left-right alliance, possibly without Mr Sch?l.Mr Haider, of course, is a wild card and his return to the stump could revive his ailing party. He kept some distance from the government, and will, as usual, claim the status of an outsider. But it was an open secret that he pulled many of the strings of the FPO.Meanwhile many Austrians who, in 1999, defected to the FPO out of disappointment with the previous coalition are now just as disillusioned with Mr Haider’s party.The rise of the far right: How extremists have gained a hold on powerAustria*Freedom Party: Far-right party joined coalition government in 2000. Its former leader J?Haider defended Nazis and EU states imposed unprecedented diplomatic sanctions on Austria in protest at the party being in power. An internal power struggle led to collapse of the government this week.Denmark*The People’s Party has supported the Liberal and Conservative coalition in power since 2001.

Its leader, Pia Kjaersgaard, has long opposed immigration and the more moderate Danish parties have exploited a rise in xenophobia. The government sparked an outcry when it proposed hardline immigration policies.Italy*National Alliance and Northern League joined the Forza Italia coalition in 2001. Gianfranco Fini, leader of the “post-fascist” National Alliance, and Deputy Prime Minister, called Mussolini the greatest statesman of the century. Northern League backs deporting jobless immigrants.Netherlands*Lijst Fortuyn had surprising success in May elections after the murder of its leader, Pim Fortuyn. Lijst Fortuyn won four cabinet posts in coalition with Christian Democrats and Liberals, including responsibility for immigration It has had a series of inexperienced leaders.. There is a problem with Europe. But we don’t know how serious it is and while we can see in general terms the causes of its difficulties it is hard to see quite what should be done about them

There is a problem with Europe.

It is at the moment still inching forward but there is a serious danger that it will experience a second leg to the recession. There is a very serious danger that some parts of the zone, Germany in particular, will slip back into negative growth. Even if Germany does escape recession it is unlikely that growth will be fast enough to make any inroads into its army, 4 million strong, of unemployed. Worse, both France and Italy, the other two big eurozone economies, show signs of suffering from the German disease, albeit so far in milder form.At the moment all the private sector forecasters are downgrading their expectations for the eurozone this year. The Eurozone Barometer, which tracks 22 forecasters now comes out with only 0.9 per cent growth this year, which is pretty dire, though the figure for next year is a more respectable 2.2 per cent. The problem is partly slow growth in export demand, as you might expect, but more the lack of domestic demand Private consumption is forecast to be up only 0.7 per cent. Add in lower company investment (which is down) and total domestic demand has gone negative, as the left-hand graph shows.It has gone most negative in the largest economy, Germany, the red line on that graph, but as you can see it is also falling in France, the next largest.Why? Well for Germany there is a plausible explanation: interest rates are too high.