Lean to the right
Right-leaning groups made considerable gains, particularly in France, Germany and Italy, with the French results prompting President Emmanuel Macron to call snap parliamentary elections amid his own party’s losses. The trend isn’t isolated to these three nations – a similar voting pattern emerged across Austria, the Netherlands and other EU countries.
The elections resulted in a fragmented European Parliament, with centrist pro-EU groups losing ground to Eurosceptic and populist parties. This change reflects dissatisfaction with traditional policies and indicates the likelihood of disruptive shifts.
Despite the gains made by the far right, the center-left and center-right political groupings that have historically dominated the European Parliament retained the largest two blocs in the legislature.
This new political landscape will significantly shape the EU's regulatory and policy focus over the next five years. Centrist mainstream groups – European People’s Party (EPP), the Progressive Alliance of Socialists and Democrats (S&D) and liberal Renew Europe – retained a majority with 56% of the 720 seats, but their combined share is 4% lower than in the previous mandate. This reduction, alongside the rise of right-wing populism, will complicate coalition building.
While panelists emphasized that predictions of massive policy changes are somewhat exaggerated by media coverage, they stressed that the election results signal a departure from the previous consensus and could impact approaches to immigration and industrial policies, climate, Ukraine and economic competitiveness.
Economic activity
The panelists also emphasized that it was important to understand the changes in Europe within a global context, particularly the upcoming US elections. The awareness of global political trends, including the rise of China and dominance of the US in technology, is driving the discussion around the need for a European industrial policy.
The EU is being spurred to action by the rise of California tech companies on one side and the emergence of China as a manufacturing base for new technologies on the other. These trends have forced more policymakers in Europe to recognize the need for change.
The panelists agreed that there is “no doubt” Europe will take further steps to boost its competitiveness and autonomy, particularly in technology because of the growing sense that it is being left behind in the new AI-driven industrial revolution.
The question of who will fund this push for greater European competitiveness remains unanswered, with tension arising between two groups: those who believe that the development of best-in-class European companies requires exposing firms to competition at home; and those who argue that industries need government support to thrive. It’s a gap that also divides big and small Member States.
Forward outlook
EU leaders are set to announce their priorities for the next five years at the upcoming European Council Summit meeting on June 27. This announcement will shape the vision for European economic policymaking through 2029, providing crucial insights for businesses to understand how regulators will approach their respective industries. The European Commission, as the EU's executive arm, will be responsible for translating this vision into actions, such as legislative initiatives.
Although no major policy reversals are expected, there will likely be a slowdown in introducing new policies. Instead, the focus will shift to implementing the extensive legislation already presented. This shift should offer businesses some relief as they navigate compliance with the many new European rules and obligations.
The leadership of the European Commission remains a key question. While Ursula von der Leyen, the current President of the European Commission, is the frontrunner for reelection, her victory is not guaranteed. The upcoming months will be critical as she seeks nomination from EU leaders and approval from the European Parliament. Their decision will likely weigh the benefits of continuity and stability at the EU level, especially given the current political upheavals within Member States.
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