Business Implications of the European Elections
The outcome of the European Parliament (“EP”) elections, which ended on May 25, will lead to a more unstable political landscape. This will require companies interacting with EU legislators to adapt their lobbying strategies. They are likely to find a shift away from the current pro-business approach in the European Parliament and Commission.
The most significant fact about the elections is that the three main parliamentary groups all lost seats. The center-right European People’s Party (EPP) remains the largest group, but they will have only 213 out of the 751 seats. The center-left Socialists will have 191 seats and the Liberals (center) 64 seats. Winners are fringe parties, particularly those who are anti-EU, anti-establishment, nationalists, or populist.
This is a prescription for gridlock and unpredictability. In the past, the traditional coalitions of the EPP on the right with the Liberals and the ECR, dominated by British conservatives had an absolute majority. No longer. Now the major parties will have to reach an agreement with fringe parties to pass legislation in this fragmented Parliament. And that will not be easy because the anti-EU parties could ultimately represent up to 25 percent of the European Parliament.
As a result, there is likely to be volatility in EU public policy decisions in the months ahead. Companies doing business in Europe will face considerable uncertainty regarding the way the European Parliament and Commission will develop. It is likely there will be a shift away from the current pro-business approach. Social priorities may become more important and the anti-EU parties may seek to block any meaningful legislation.
Companies are urged to strengthen their ties with reelected MEPs and to build ties with newly elected members. More than half of the Parliament has been reelected which will permit experienced MEPs to play a more dominant role. The situation is fraught with risk but also opportunity.