Stockholm (Ekonamik) – Elections for the European Parliament (EP) confounded commentators’ expectations of ever-lower turnout by delivering one of the highest turnouts in history, with half of Europe’s population exercising its vote. The result is one of the most fragmented parliaments in European history, where parties now must find ways to work together and choose, among others, the next president of the European Commission. The net effect is that Europe is pulling in two diametrically opposed directions (and away from the status quo): one in which common solutions are sought to universal problems such as climate change, and the other of which seeks a return to national sovereignty.
The main takeaways are that the European People’s Party (EPP) and the Party of European Socialists and Democrats (ES&D) can no longer muster majorities together or on their own and will have to rely on the Greens and the Alliance of Liberals and Democrats (ALDE), both of whom made impressive gains. Meanwhile, the far right also consolidated its presence in the EP, even though its results fell far short of the third of the seats predicted. The Brexit party of Nigel Farage, Matteo Salvini’s Lega Nord and Marine Le Pen’s National Rally, however, are now among the largest parties represented in the chamber.
Source: European Parliament
Asset managers had approached the election with some trepidation; the appeal to voters of many of the new MEPs is their opposition to big business and desire to restrain “powerful investment groups,” combining that message with appeals to nationalism. One asset manager who seems to have stoically expected the result was JP Morgan AM’s head of Europe Patrick Thomson, who told the Financial Times that he believed that if Europe’s asset management industry “is successful and it is benefitting the 500m citizens of the EU, they’re not going to want their savings imperilled by politicians… I think politicians understand that very well. They want a highly competitive, well-regulated market.”
European stocks generally closed higher Monday in what was interpreted as investor relief over the results, despite low trading volumes from closed markets in the U.S. and the UK. Confirmation of merger talks between Fiat Chrysler and Renault also contributed. The pan-European STOXX 600 added 0.4%, Germany’s DAX closed roughly 0.5% higher as France’s CAC rose 0.3%. The euro lost ground against the dollar Monday afternoon, however, trimming earlier gains. And Italy’s FTSE MIB fell into negative territory by the end of the day, following reports that Brussels is considering disciplinary action over Italy’s public debt. A decision will be made following a report on Italy’s public finances on June 5.
The next point of order on the European agenda will be determining the next European Commission president. The merger of French president Emmanuel Macron’s mandates with the ALDE grouping suggest he may be able to play the role of kingmaker, which could suggest an unexpected choice arising, away from the larger party Spitzenkandidaten Manfred Weber of the EPP or the ES&D’s Frans Timmermans.
Video: European Parliament elections 2019: all you need to know about how they work (Euronews) (YouTube)
