International Elections Series: An EU Election Primer — Turn Right at Brussels

At a Glance

• Current polling suggests that a populist coalition of right-wing parties could be on track for a majority for the first time in European Parliament (EP) history. This could have a large impact on the legal direction of the EU. 
• Cooperation on the right should not be taken for granted, as the European People’s Party has clearly stated they will only work with pro-EU, pro-NATO and pro-Ukraine parties. This could lead to fragmentation of the right.
• What is certain is that the makeup of the EP will change, and stances that could be taken for granted in the last EP mandate, such as pro-climate and pro-free trade policies, should not be taken for granted in the next five years. 

The 27 member states of the European Union (EU) are holding elections for the European Parliament (EP) between June 6 and 9. European voters will elect 720 members of the European Parliament for the next five-year term.

These elections are important for businesses that operate in the EU, as they will have wide-ranging consequences for the EU’s approach to tech regulation, the green transition, European economies and the single market, as well as the EU’s geopolitical positions on Ukraine, China and the U.S. 

What is the EP and why does it matter?

The EP is one of seven EU institutions. Together with the Council of the EU, it adopts EU legislation following proposal from the European Commission (the ‘Commission’). An important role for the EP is approving all EU commissioners as well as the commission president (currently Ursula von der Leyen, who is seeking reappointment). 

Voters in each member state pick candidates from national parties, so domestic politics play a large role in these elections. Each national party organizes itself into pan-European groups or ‘families’ and, once elected, these members of European Parliament (MEPs) usually vote along group lines.

The last EP election took place in 2019. For many years, the EP usually operated with a ‘super-grand coalition’ of the three centrist groups — the Socialists and Democrats (S&D) on the left, Renew in the middle and the European People’s Party (EPP) on the right. 

Current polling suggests that a populist coalition of the EPP and other right-wing parties, including the European Conservatives and Reformists (ECR) and Identity and Democracy (ID), could be on track for a majority for the first time in EP history. This could have a large impact on the legal direction of the EU. 

What does a rightward shift mean for international businesses operating in the EU?

If elected, the right-wing coalition would likely shape new legislation according to their priorities. New initiatives on economic competitiveness, defense and migration could be expected. Cooperation on the right should not be taken for granted, because the EPP has clearly stated they will only work with pro-EU, pro-NATO and pro-Ukraine parties. This could lead to fragmentation of the right.

Below we outline some possible changes to policy areas that will be relevant to international businesses.

Food & Agriculture

In the current term, the ‘European Green Deal’ was touted as a once-in-a-generation transformation of Europe to a net-zero emitter of greenhouse gasses by 2050. A slew of legislative measures were introduced within various packages. In the spring of 2024, largescale farmers’ protests erupted across Europe, showing discontent against various EU policies. If right-wing parties gain more seats in the new EP, it can be expected that these initiatives will be revisited and at the very least, pro-climate policies will be de-emphasized. 

Financial Services

The Capital Markets Union is a longstanding plan for the EU to create a single market for capital, to get money (investments and savings) flowing across the EU without borders. The initiative was launched back in 2015 and was re-adopted by this Commission in 2020. It has been confirmed that the new legislative initiatives will be brought forward in the new legislative cycle. 

Business competitiveness (particularly compared against the American regulatory space) is high on the agenda for most of the mainstream political groupings, so new initiatives on this point should be expected.

Tech

The EU has so far taken a leading role in regulating the business of tech, including in data and artificial intelligence. The EU AI Act was recently enacted, and the General Data Protection Regulation (GDPR) has existed for many years now. Where tech regulation goes from here is uncertain. The current commissioner for Competition, Margrethe Vestager, has begun to utilize her new powers in the Digital Markets Act (DMA) and the Data Governance Act (DGA) to launch investigations into big tech companies. However, this approach could change under a new commissioner; and who ends up being appointed to this position could have a big impact on how these new tools are used. 

Defense

Recently the Commission unveiled a new EU defense industrial strategy. How much the EU can do in this space is restricted by the fact that the EU’s treaties prevent the use of its funds for military expenditure. The EPP has called for a new Commission post to be created for EU defense policy. However, defense policy is jealously guarded as a purely member-state competency. This, paired with the questions around ID’s stance on Ukraine and Russia leads to uncertainty as to how much change will occur in the years ahead.

Change — but how much?

Uncertainty abounds regarding where exactly the political groupings will be placed in the EP. The final lay of the land will have a large impact: first, on the make-up of the Commission, including who gets selected to be the Commission president; and second, on what happens to the parties’ respective policy priorities. What is certain, however, is that the makeup of the EP will change, and stances that could be taken for granted in the last EP mandate, such as pro-climate and pro-free trade policies, should not be taken for granted in the next five years.