The rising support for populism across Europe is set to complicate the plans of French President Emmanuel Macron to reform the euro zone.
The pro-European Union (EU) leader, who defeated far-right candidate Marine Le Pen in the last round of France's 2017 presidential election, has said that Europe should harmonize its tax policies, establish a minimum wage in every country and have a euro zone finance minister and budget — among many other proposals that he says will integrate EU nations further.
But the rising support for anti-establishment parties across Europe — seen most recently in Italy's general election — could jeopardize Macron's proposals.
"Half of the Italian electorate supported anti-establishment parties. Independently of who forms the next government, it will be hostile towards the European Union," Danielle Haralambous, an analyst at the Economist Intelligence Unit (EIU), told CNBC over the phone.
Last Sunday's election in Italy resulted in a hung parliament, with strong support for the populist Five Star Movement (M5S) and the far-right Lega party. Soon, Italian politicians will start negotiations to form a new government, but it is clear that both M5S and Lega will have a strong presence in policy-making.
The fact that both wants to renegotiate the EU's fiscal rules and increase public spending is raising eyebrows in Berlin. "Germany will be more concerned with risk-sharing," Haralambous told CNBC.
Current proposals to reform the euro zone are based on a higher-level of risk-sharing between the 19 countries in the euro zone. This tends to be a sensitive issue for countries like Germany and the Netherlands because they don't want their traditionally healthier finances to be impacted by other countries with extreme high levels of debt.
"Populism will be a hurdle," Bas van Geffen, analyst at RaboResarch in the Netherlands, told CNBC over the phone, adding that euro zone reform will be a "long process."