Smith’s Research & Gradings Geopolitical Brief
The European Parliamentary Elections – A Shock to the System?
Scott B. MacDonald, Chief Economist
Parliamentary elections are over, and far-right political parties had their best-ever outing. Combined votes across the 27-member bloc gave the far right close to a quarter of the chamber’s 720 seats. Probably the most stinging voter rebuke to a ruling party was in France, where Marine Le Pen’s Rassemblement National (RN) captured 30 of the country’s 81 EU seats and walked away with 32% of the popular vote, well ahead of President Macron’s centrist Renaissance Party (14.6%).
What to take from the European Parliamentary elections?
· Far-right parties benefited from voter discontent with many ruling parties over migration, unemployment, and green policies. Indeed, economically hard-pressed EU taxpayers are increasingly nervous about or resistant to new environmental rules, which pressure them to purchase a new home heating system or a less-polluting car.
· The big losers were the Greens. Green parties won 52 seats, well below their 71seats in the 2019 elections. Another major loser was Olaf Scholz’s Social Democrats who had their worst post-World War outcome in a nationwide vote, with13.9%. The far-right AfD came in second at 15.9%, up from 2019’s 11%.
· Germany’s big winners were the Christian Democrats with 30% of the vote. In Italy, Prime Minister Giorgia Meloni’s party came in first with 28.5% of the vote, well ahead of its rivals.
· While European politics has shifted rightwards, centrist parties remain firmly in control of the EU chamber, where the legislative sausage-making process takes place. Indeed, the centrist bloc (Socialists & Democrats, Renew Europe and European People’s Party or EPP) holds 403 seats, a comfortable majority. This helps solidify the position of the EU’s president Ursula von der Leyen, a EPP member.
· Probably the biggest result of the elections is that in the wake of Marine Le Pen’s RN winning the popular vote, President Macron called a snap election for the National Assembly. The big question – is France ready for a far-right government that is anti-EU, anti-immigrant, pro-Russian, and supportive of economic nationalism? Probably not, but a RN win on June 30th could bring a cohabitation government of a centrist president and far-right dominated National Assembly.
The bottom line is that Europe’s politics have become more complicated as the far-right parties key off public dissatisfaction on issues such as environmental and migration policies. And there should be concern that progress on dealing with climate change will slow. Simultaneously, the Euro Area economy should continue its slow recovery (0.8% real GDP growth in 2024 and 1.5% in 2025 IMF estimate),supported by a further loosening of European Central Bank monetary policy. Considering the above, the European parliamentary elections were less a shock to the system and more of a signal that many people feel disconnected from what Brussels dictates on the policy front, leaving politics at the national level the place where the action is going to be. France looms large in this. Stay tuned for more drama!
