European Elections – On Steady Ground

Key takeaways

• In line with our expectations, the European elections did not prove a major market-moving event. Most parties came close to pre-election poll numbers on significantly increased participation.
• EPP (European Peope’s Party) and S&D (Socialists & Democrats) remain the two largest parties in the new parliament, although their majority has shrunk. Pro-European Liberal and Greens to gain will play a more prominent role, given their strong gains.
• While anti-establishment parties also made some gains, these were rather small overall. The impact of Eurosceptic parties is likely to be more symbolic than real as they remain a fairly small share of the Parliament and do not all share a common platform.
• Several key positions in European institutions need to be filled in the coming months, including the presidency of the European Commission, the European Council, and the ECB (Eurpean Central Bank).

European elections took place on 23-26 May in the various EU member-states, with a substantial rise in participation. The almost-final results suggest that the EU Parliament’s traditional two-party majority has broken, but pro-EU parties maintain a dominant share thanks to large gains by Liberals and Greens. Anti-establishment Eurosceptic parties also made gains, but these were limited in size and concentrated in specific countries.

In line with the trend already observed in most national elections, the EU Parliament’s two main centre-right and centre-left parties (EPP and S&D) that have traditionally dominated the legislative process through a joint majority have lost ground, and now control only of 329 out of 751 seats (see Chart 1). By contrast, Liberal and Green blocs – both strongly pro-EU – have made significant gains, resulting in a pro-European majority controlling over two-thirds of seats in the new Parliament. Power will thus be less concentrated, as EPP and S&D will now need the support of the Liberals and/or the Greens to reach a majority.

The fear of a wave of “populist” parties emerging, in a way that would alter the path of European politics, has failed to materialise. Eurosceptic blocs scored some gains, but these were somewhat smaller than expected and concentrated in certain countries (notably Italy - and to some extent the UK - although these MEPs are unlikely to serve a full term). Their overall share of seats will be about one-fourth (and split among three different blocs), and will do more to provide them with a bigger platform for their agenda than to set off a change in EU power structures.

Read the full article here.