Two of Europe's leading far-right populists struck a pact on Wednesdayto build a continental alliance to wreck the European parliament from within, and slay "the monster in Brussels".

Marine Le Pen, the leader of France's rightwing nationalist Front National, and Geert Wilders, the Dutch maverick anti-Islam campaigner, announced they were joining forces ahead of European parliament elections next year to seek to exploit the euroscepticism soaring across the EU after four years of austerity, and the financial and debt crisis.

Le Pen, who has predicted that the EU will collapse as did the Soviet Union, said the aim was to bypass Brussels and restore freedom to the nations and people of Europe.

The rise of populists on the right and the left, from Sweden to Greece, has worried the mainstream EU elites and is already shaping policy ahead of the May elections. At the top level of EU institutions in Brussels, there is talk of "populists, xenophobes, extremists, fascists" gaining around 30% of seats in the next parliament and using that platform to try to paralyse EU policy-making.

"This is a historical day. Today is the beginning of the liberation from the European elite, the monster in Brussels," declared Wilders after meeting Le Pen in the Dutch parliament in The Hague. "We want to decide how we control our borders, our money, our economy, our currency."

The aim of the electoral alliance appears to be to form a Trojan horse in Brussels and Strasbourg: a large parliamentary caucus dedicated to wrecking the very institution that the far-right has entered. To qualify for caucus status, the new group needs at least 25 MEPs from seven countries, which they will get easily on current poll projections, although it is not clear if they can yet muster seven national parties.

"We want to give freedom back to our people," said Le Pen. "Our old European nations are forced to ask the authorisation of Brussels in all circumstances, forced to submit their budget to the headmistress."

Both politicians are currently riding high in the polls in their own countries. A poll last month in France put the Front National at 24% ahead of the governing Socialists and the mainstream conservatives. Wilders' Freedom party, while suffering setbacks in elections last year, is currently leading in Dutch opinion polls.

Eurosceptic parties or those actively committed to wrecking the EU and to ditching the single currency are also expected to do well in Greece, Austria, Sweden, Denmark, Poland and elsewhere in eastern Europe, while Nigel Farage's UK Independence party is being tipped as a possible winner of European elections in Britain.

"As a result of the economic fallout from the eurozone debt crisis, populist parties on both right and left have seen and will likely realise a significant surge in their popularity," said analysts at the Eurasia Group. "The crisis has provided populist and nationalist parties with an excellent opportunity to clean up and modernise their rhetoric. Political parties hitherto thought of as 'nasty' or 'racist' can no longer be considered so."

The pact sealed in The Hague is a big boost for Le Pen who is successfully developing a more moderate image distanced from the overt antisemitism of her father, Jean-Marie Le Pen, and for her campaign to form a broader "European Alliance for Freedom" on the nationalist right.

The effort to pool policies and campaigns has foundered in the past because the various nationalists invariably find enemies in other nations and because far-right parties tend to be dominated by leaders enjoying a cult of personality.

The aim of the Franco-Dutch alliance is to bring in Sweden's Democrats, also rising in the polls, the anti-immigration Danish People's party, Austria's Freedom party of Heinz-Christian Strache, which took more than 20% in recent national elections, and the rightwing Flemish separatists of Vlaams Belang.

By forming a new caucus in the European parliament, the group would gain access to funding, committee seats and chairs, and much more prominent chamber speaking rights. Farage, leading a caucus of 33 MEPs, has exploited the opportunity deftly to raise his European and national profile.

Wilders said they wanted UKIP to join, but Farage has said he will not collaborate with Le Pen because of the Front National's reputation for antisemitism.

There are also several major policy differences that Wilders and Le Pen appeared to be burying on Wednesday which are likely to resurface. Coming from the Dutch libertarian tradition, Wilders is strongly pro-Israel, pro-gay, pro-women's rights. The Front National is seen as homophobic, anti-gay marriage, and no friend of Israel.

The two big policy areas they have in common are anti-immigration and anti-EU.

They have ruled out collaborating with more overtly fascistic parties such as Golden Dawn in Greece and Jobbik in Hungary.

The attempt at a concerted campaign comes as support for the EU is haemmorhaging across Europe.

Gallup Europe, following polling in September, found that only 30% viewed the EU positively compared to 70% 20 years ago, and concluded that "the European project has never in its history been as unpopular".

Even in traditionally pro-EU countries, such as Germany, support is atrophying. It remained high among older people but the 25-50 age group was split 50-50 between EU supporters and opponents. Across the EU, eurosceptics outnumbered EU-supporters by 43-40%.

A new study by Mark Leonard and Jose Ignacio Torreblanca for the European Council on Foreign Relations identified five "cleavages feeding centrifugal tendencies in the EU".

The European elections "will be held against a background of economic crisis and loss of confidence in Europe as a political project," the authors found, pointing to the possibility of a "Tea party-like scenario" in which eurosceptic parties capture a large quota of the seats, turn the institution into a "self-hating parliament" which is then "effectively prevented from acting".