Investing.com – This Monday, experts analyze the results of the European elections and how they may affect the markets.
“There has been a strengthening of the far-right “anti-establishment” parties in Europe, but they have not exceeded estimates. This means that the “center majority” remains intact in the European Parliament, probably obtaining more than 55% of the total of votes, while the green parties throughout Europe did lose parliamentary seats,” explains Reto Cueni, economist at Vontobel (SIX:).
“The most direct impact of the elections on the political landscape in Europe is that French President Emanuel Macron did call for early elections at the end of the month, as his party was comprehensively defeated by the French right-wing Rassemblement National party,” he adds. Cueni.
3 factors to monitor
For Cueni, investors should take into account 3 things:
- The results continue to point to a stable “center majority” in Europe, which is important in times of high geopolitical uncertainty, the war in Ukraine and the rivalry between the US and China. For now, this is positive news for investors. However, in the coming weeks it will be seen whether the centrist parties can work together and elect a centrist president of the European Commission for the new five-year term.
- The shift towards more “anti-establishment” right-wing parties that are politically opposed to the “green new deal” and prioritize national security and border control in their program shows how the political approach in Europe has changed. Following the losses of the Green “bloc” in Parliament, the political push for the “green transition” is hampered and the likelihood increases that public spending on green initiatives will be curbed during the legislature while defense spending increases. and border control. Investors must pay attention to the presentation, in mid-July, of the programs of the candidates for the next presidency of the EU, which will allow them to know the agenda of the parties and the political momentum in Europe.
- Third, early parliamentary elections in France will increase uncertainty about the political course of Europe’s second largest economy. France’s two-round electoral system typically prevents the most extremist forces from winning an election, but the current strength of the far right could prove strong enough to finally change the country’s political forces. However, the left also has intact chances of winning seats in the next elections if it manages to unite its forces.
“All of this increases uncertainty about the French government’s future fiscal stance, since a change in the balance of power in the French parliament could translate into higher social spending. Given that the country’s political system makes foreign and defense is largely a presidential prerogative, the uncertainty about France’s future collaboration in Europe and at the geopolitical level remains controlled, at least until spring 2027, when the next French presidential elections are scheduled,” Cueni concludes.
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