European Parliament Elections Unpacked: Insights and Future Outlook

The landscape of European Union lawmaking is expected to become more complex following the parliamentary elections, which presented a varied outcome across the continent. FIPRA will be closely monitoring these developments, ensuring our clients stay informed about the anticipated policy changes and business implications.

In the meantime, we are pleased to share insights from our Network partners on the current situation "on the ground" in several key member states. This analysis begins with France, followed by Germany, Italy, Spain and Belgium.

The dissolution of the National Assembly (lower house of Parliament) by the French President following the results of the European elections is an unexpected decision. Holding snap elections seems like a very risky gamble, as it is difficult to understand what Emmanuel Macron might expect from it. The history of electoral cycles show that any election held shortly after a previous one confirms and amplifies the scores of the winners of the previous election, when taking place within the next 3-4 weeks. Initial polls support this expectation of continuity in voting intentions.

Most observers of the French political landscape considered a dissolution would have made sense, but within a different timing, after the 2024 Olympic and Paralympic Games, either before or after the expected failed adoption of the budgetary bills in Parliament. Emmanuel Macron's decision has at least the merit of initiating a new phase of restructuring of the political landscape, a process that had been reset but moving very slowly since his first election in 2017.

In a press conference held on June 12^th, Emmanuel Macron attempted to clarify his motivations and called for a national union from the moderate left to the classic right. The official campaign has already begun, with the first round of legislative elections on June 30^th , and the second round on July 7^th.

On the right: The dissolution accelerates the split within the traditional right party Les Républicains (LR), between those advocating a pro-market/business, pro-European stance, and the populist right. The latter are expected to join the far right Rassemblement National (RN) following the call for an alliance with the RN by Eric Ciotti, LR’s President until his move. This position is opposed by many LR leaders, but it’s too soon to say what will happen with this party. So far, the opponents to Eric Ciotti's call are leaders who are not affected by the snap elections and who will not need local political support to get re-elected.

On the left: The dissolution has forced members of the former left wing NUPES alliance, which ran during the 2022 legislative election, to quickly reach a new electoral agreement, broadened to other left-wing parties. This move could potentially enable them to be neck-to-neck with the RN and potentially the first political force within the National Assembly. This doesn’t mean that they would succeed in agreeing on a political program afterwards. 

Within the presidential majority: The presidential majority is in a very weak position, also embroiled in a struggle among the leaders of its different components to succeed to Macron. Despite Emmanuel Macron's appeal, it is unlikely that the presidential majority will reach an agreement with another political force to limit the defeat that seems to be predicted by the polls.

Probable scenarios: Four possible outcomes seem now probable (with the first two having the highest chances of becoming a reality):

Following the European elections, there has been a notable shift in political dynamics in Germany. Although the conservative party received the highest number of votes at 30%, the far-right party (AfD) and far-left party (BSW) emerged as significant players in the election receiving 15.9% and 6.2%, respectively. The three parties of the so-called "traffic light coalition" (Social Democrats, Liberals and Greens) together garnered only 31% of the votes. Chancellor Scholz and his government are now facing increased pressure as the election outcome raises concerns about the stability of the coalition and its ability to govern effectively. Internal conflicts persist on issues such as the economy, the asylum system, and the federal budget, all while state and federal elections are on the horizon.

It was expected that the center-right Christian Democrats would emerge as the winners. The real question was how far they could push back on the far-right Alternative for Germany (AfD). The results washed away illusions that a ‘democratic firewall’ [Brandmauer] would be enough against the voters’ shift to the extremes, especially given the fact that the AfD won the polls in many eastern federal states. The parties of the left spectrum were shocked by their losses: The Social Democrats experienced their worst national vote result in over a century. Support for the Greens nearly halved.

Impact and Implications: As a result of the election, there have been discussions about a "vote of confidence" raised by the CDU/CSU, which could dissolve the German parliament. Importantly however, a vote of confidence in Germany can only be expected if there is a shift within the SPD against Olaf Scholz. Currently, this does not appear to be the case.

The elections also revealed a programmatic alignment between the parties AfD and BSW, questioning the effects of democratic isolation of these extremes. In contrast, the CDU/CSU appeared to have a less distinct programmatic stance from its democratic competitors. When it comes to crucial issues, like the support of Ukraine and economic sanctions against Russia, the election results might force centrist parties to rethink their positions. This will affect Germany’s leadership role in major European policy projects.

For instance, the debates surrounding the Green Deal will exemplify the direction in which the EU is moving in terms of economic policy. The success of the right-wing parties in the European Parliament makes a reorientation of economic and climate policy almost inevitable. Alongside the liberal FDP, the conservative CDU/CSU rigorously campaigned to lift the ban on combustion engines. Farmers can therefore expect to be spared new climate protection and environmental agendas in the forthcoming proposals for the EU's future agricultural policy. The momentum for climate protection is likely to wane. In any case, this is in line with the strategic agenda that the heads of state and government want to adopt for the next legislative period at the end of June.

The strengthening of right-wing parties could become a problem for the role of the EU in competition with China and the United States. The EU needs an agenda for sovereignty and competitiveness right now in order to avoid being crushed in the tough geopolitical conflict between the US and China. Moreover, the China and Russia-friendly positions of AfD voters will make it increasingly difficult to represent transatlantic politics from the center of the German party landscape in Brussels. This, along with the uncertain outcome of the US Presidential elections in November, will exert pressure on the European trade agenda.

The results point to a strong showing of the ruling party, Brothers of Italy (ECR – 24 seats), which hit its record-high, while its junior allies Forza Italia (EPP – 8 seats) and Lega (ID – 8 seats) lost seats from the 2019 European election. The Democratic Party (S&D – 21 seats) and Greens-Left Alliance (6 seats) performed above expectations. For the first time in a European election, the turnout dropped below 50%.

These results highlight a polarisation of the Italian political landscape, to the benefit of Brothers of Italy on the right, the Democratic Party on the left.

Impact and Implications: While strengthened in the domestic arena, PM Giorgia Meloni, who is the chair of the ECR party, is now confronted with a scenario where a renewed coalition between EPP, S&D and Renew can command a majority in the new EP, leaving ECR with the unsolved dilemma of whether to support Von der Leyen for President of the Commission with little bargaining power, or oppose her in an effort to maintain the unity of the group.

In either case, Meloni and ECR will work to form conservative majorities with EPP and Renew on individual EU legislative files, where Italy’s PM will aim at promoting a more industry-friendly approach, for instance, to the green transition agenda, the revision of the EU pharmaceutical legislation, contrast to illegal immigration.

Meloni will also have to address the implications of the revised Stability and Growth Pact, under which the European Commission has opened an excessive deficit procedure against Italy: this will translate into an obligation for Italy to reduce its deficit by approx. €10-12 billion/year, threatening to thwart Meloni’s effort to lower the tax burden on households and businesses.

On the international stage, Meloni is expected to confirm her firm pro-NATO stance, including support for aid to Ukraine, although the position of the Italian conservatives regarding relations with Russia may be influenced by the result of the U.S. Presidential election later this year.

European voters took a sharp right turn in yesterday’s European elections to the European Parliament. 17 million Spanish voters, 49.2% turned out, and gave the Popular Party Group of Alberto Feijóo a total of 22 seats in Parliament, 9 more than in 2019, and 20 to the Socialist Party Group of Prime Minister Pedro Sánchez, 1 less than in 2019. Undoubtedly, political analysts from across the continent will be burning the midnight oil in the weeks to come, in an attempt to understand and explain why Europeans have turned away, so abruptly, from policies and politics centered on the green agenda, regulations, higher taxes and inclusivity.

Let's look at what the results mean for Spain, and more importantly to its fragile, socialist coalition, led by Pedro Sánchez. If one were to listen to the front runner for the Socialist Party Group, Teresa Ribera, the results mean nothing less than a strong wind in favour of Pedro Sánchez and his coalition, with voters clearly asking for more market intervention, higher taxes, more subsidies, more green agenda, and more inclusivity and equal rights. 

However, the truth is that only half of the voters, 8.5 million to be exact, voted in favour of the coalition and its policy agenda, and the other half voted against. The typical division of “Las dos Españas”, as one might hear on the street. Looking more closely at the numbers, certain things stick out. First of all, only half of the 34 million registered voters actually bothered to vote. I suspect that many of those who didn’t, are disgruntled, traditional, left-wing voters. There is clearly something they either do not like in the coalition’s way of doing things, or there is something in their policy that does not resonate well with them. There was also a significant number of agnostic and/or uninterested or disenfranchised voters, who neither care, nor believe in either the current left or the right.  We are talking huge numbers here.   Enough to make significant changes in election results if they came out “en masse” in a general election, or even if only half of them, 4.25 million came out to vote.

But let’s look again at the 17 million who did turn out to vote, on a Sunday, late spring. The far-right VOX, with 1.6 million votes, got twice as many as the junior partner in the coalition, SUMAR, led by Yolanda Diaz, and 15% more than SUMAR and Podemos (former junior partner in the coalition) put together.  Even the rookie and completely unknown, “Se Acabó La Fiesta  – SALF” party of Alvise Pérez, got almost as many votes as SUMAR and almost double those of Podemos. For some, SALF makes Vox look like a baby lamb. That kind of says it all. At best, Podemos has managed to secure a retirement plan for the party leader, Irene Montero, and SUMAR, probably one for Yolanda Díaz, in the mid-term.

Sánchez’s splintering of radical and pro-independence political groups from the regions, ERC (Catalonia), Bildu (Basque Country) and BNG (Galicia), have barely done any better, only managing to secure one seat in Parliament for each of the three components of the platform they were running on and none for the fourth member, the European Left. What of the rebel with a cause, Puigdemont, leader of the right-wing pro-independence Junts political group? He took a serious blow and only managed to secure one seat in Parliament, one less than the two he won in 2019, and also probably his retirement plan when he hits the end of the road of politics in Spain (and in Catalonia) which will likely be sooner rather than later.   

So, does this mean an early general election or the end of the Sánchez coalition? Unlikely. Those things will only be determined in the negotiations on the national budget law, which will unofficially start, on the beach, in August, and officially in September, when the draft law is presented to the Parliament by the Government.  In the meantime, the results mean more of the same, and probably even more green policy, more taxes and more inclusivity in Spain, at least until the new European Commission is appointed this autumn.

With a clearly right-wing conservative European Parliament, this new European Commission will be more austere, more business friendly and less green happy. Exactly the opposite of what Sánchez will want to continue to be, despite a dwindling European budget and an end to fiscal and budgetary freedom. This allows him to blame the right, free markets and fiscal austerity when he is no longer able to finance his expansive budget spending spree, and is forced by his coalition partners, to call general elections.

About 8 million Belgians went to the polls on June 9th for federal, regional and European elections. Here are the five key takeaways e have learned so far.

1. Pollsters got it wrong. By a lot. In Flanders, heavy losses for the greens Groen and the liberals Open Vld were predicted, but the rise of the Flemish far-right Vlaams Belang was much smaller than anticipated. Equally, French-speaking left-wing parties PS belge, ECOLO, but also PVDA / PTB lost big time. A political earthquake was predicted in Flanders but occurred in Wallonia. The failure of polls to fully capture political change is something to think about.

2. Political reality has moved beyond stereotyping. The traditional simplistic cliché of "hard-working liberal north" versus “lazy socialist south” is turned upside down (if it were ever true, at all). After yesterday’s elections, Wallonia may end up with a more right-wing liberal government (Mouvement Réformateur (MR) / Les Engagés.be - Mouvement Participatif) than Flanders (N-VA / cd&v / Vooruit). This development sheds an interesting light on societal dynamics, perceptions and values.

3. Brussels has developed its own political ecosystem. Flemish and French-speaking parties in the Brussels Capital Region recorded completely opposite performances, with strong Flemish greens (but heavy losses for French-speaking Ecolo) and strong French-speaking liberals and left-wing parties (but losses for Flemish liberals and socialists). Other parties showed mixed results as well. Electoral outcomes in Brussels are no longer influenced by political dynamics in Flanders and Wallonia. This was the case in 2019 already but it is even more so today.

4. The much-feared political deadlock may not materialise. On paper, coalition-building is straight forward in Flanders and Wallonia. Government-making may take longer at federal level but if Flemish N-VA and French-speaking MR agree on a reform agenda in light of upcoming budgetary challenges, things may move much quicker than anticipated after the local elections of October 13th.

5. Traditional left-right issues topped the agenda. No clear political issue dominated the election campaign but voters certainly highlighted purchasing power, cost of living, economic growth and migration yesterday as top priorities for the next five years. Environmental and ethical issues were much less of an issue. Belgium is heading for more business-friendly governments in the next term, but likely with strong opposition from trade unions and (green) civil society.