Europe's fragile recovery could be rattled this year by the upcoming European parliamentary elections and bank stress tests, the World Economic Forum was warned on Wednesday.

Axel Weber, chairman of UBS, told an audience at Davos that "there may be risk coming back" into Europe which could undermine recent progress by governments and the European Central Bank to stabilise the situation.

Weber said that May's European elections could lead to more extreme, or anti-European, parties gaining influence in the parliament. He cited the US Tea Party as an example of how such a group can stymie political process.

Pierre Nanterme, chairman and CEO of Accenture, said he was "extremely concerned" about the European elections, given the rise of extreme parties in Europe riding on the back of record unemployment.

He criticised European leaders and policymakers for failing to address people's fears over inequality and employment, issues that are "entirely absent" from the technical debate about Europe.

People "want a job, they want inclusion and diversity within Europe", Nanterme said.

Weber explained that the Asset Quality Review could also raise fresh concerns in the financial markets over the strength of Europe's banks. Those stress tests are meant to be an exam, he pointed out, and an exam is only credible if some candidates fail it.

"Despite pressure from politics, some will not pass," predicted Weber. He fears that speculators will try to guess the outcome of the stress tests, by buying winners and selling losers before the results come out. Europe's new rules on bailing in bond-holders means bank bonds, and insurance on them, will be targets.

Banks which fail the tests will require additional capital – and Weber says this will "put governments back into the game" and put pressure on sovereigns to help their banks.

Weber and Nanterme were speaking on a panel alongside Harvard professor Kenneth Rogoff, who said that the easing of the eurozone crisis was the single biggest reason for the pickup in the world economy last year.

And there was broad agreement that Europe's youth unemployment crisis is a major threat to its long-term prospects, and to social and political unity across the region. Rogoff dubbed Europe's jobless rates "really horrific", warning that its ageing society risks destroying the valuable asset of its young people.

Europe is "severely growth challenged, and a region that really isn't taking care of its future," Rogoff added.

Sir Martin Sorrell, WPP chief executive, cited Spain's "unacceptably high" youth unemployment rates as an example of Europe's problems.

"You cannot have a situation where 50% of your young people are out of work … it's politically and socially unacceptable," said Sorrell.

On growth, Sorrell said that "the bookends of Europe, the UK and Germany," are performing well, but that the countries in between are struggling. France is still on the downturn, he said, while Italy is bumping along the bottom.

• This article was amended on 24 January 2014. The earlier version said Pierre Nanterme was "chief executive of Accenture in France".