What are European businesses expecting from the EU elections?

The EU elections, due to be held between 6 June and 9 June this year, have already drawn a significant amount of attention, with several parties promising different regulations and facilities, especially for businesses.

According to the European Council on Foreign Relations (ECFR), this year’s elections could potentially swing to the right in several countries, because of an increase in the appeal of populist radical right parties. On the other side, green parties, and centre-left parties’ sway could quickly decrease.

The outcome of the EU elections could have a significant impact on trade policies, grants that businesses may be eligible for, climate finance, developmental policies and more. As such, businesses are anxiously anticipating the results, due to the possibility of them having a significant impact on their operations in the medium and long-term.

Julie Linn Teigland, a senior partner at accountancy giant EY told Euronews what EY would most like to see from the EU: “The upcoming elections are a pivotal moment for the EU, shaping the political agenda for the next five years across the bloc.

“They could not come at a more important moment. Our own research finds that foreign direct investment into Europe declined by 4% in 2023 – the first decline since the pandemic, and investment levels remain 11% lower than 2019. Europe is facing strong competition from the US and China and action must be taken now, if it is to remain competitive.

“Whatever the outcome of the elections, the EU must focus on boosting international trade, becoming a leader in green growth, putting Europe at the forefront of the technology and AI revolution and equipping the next generation with the skills they need to propel us forward. Investors are looking for a consistent approach on these key themes that will play a huge role in driving European competitiveness.

Sylvain Broyer, chief EMEA economist at S&P Global Ratings told Euronews: “Despite avoiding a recession and nearing full employment, Europe’s productivity challenges persist. The decline in productivity, particularly evident in key Eurozone economies such as the Netherlands, France, Germany and Italy, underscores the need for collective action. Enrico Letta’s call for redefining the Single Market highlights the need for a concerted effort to address these challenges.

“To regain competitiveness and drive sustainable growth, EU policymakers must accelerate integration and deepen the European single market. This requires an agile European Parliament and highly committed European Commission.

“The Capital Markets Union project offers a clear roadmap for progress, as acknowledged by Letta. Achieving its objectives would be a significant step forward, unlocking the potential of European savings for domestic investment.

“Key measures within the CMU agenda, including the integration of equity markets, tax reforms and improvements to bankruptcy laws, can pave the way for a more dynamic and resilient European economy.”

Jochen Stanzi, chief market analyst, CMC Markets believes that climate change regulations should be kept at the forefront of the new government.

He told Euronews: “In the upcoming 2024 European Parliament elections, several major issues are set to shape both the campaigns and the future direction of the EU. First, climate change and the European Green Deal are front and centre.

“This policy isn’t just about the environment, it’s intertwined with economic, monetary and industrial strategies and is a hot topic given its impact on everyday lives and industries. Then, energy security is crucial, especially in today’s geopolitically tense environment, influencing everything from household energy bills to national security policies.

“Economic recovery post-Covid-19 continues to be a priority, with a focus on ensuring stability and growth across the union. Now that inflation has come down closer to the ECB’s 2% target, politicians can hope for a more friendly rate environment, meaning that growth could pick up again in the remainder of 2024 and 2025.

“Security and defence have taken on new urgency, particularly with the ongoing conflict in Ukraine highlighting the need for a strong and cohesive EU defence strategy.”

Businesses want to see more policy focus on AI

Coming to what new regulations would be most helpful for industry, Teigland said: “Data and artificial intelligence (AI) now sit at the core of business transformation. The EU has led the way in regulating this digital space and is in a unique position to promote human-centric values at the heart of legislation on AI, cyber security and data use.

“Building confidence in AI and new technology through effective governance practices should continue to be a priority for policymakers. Regulations must be flexible and future-proof.

“On sustainability and progress toward net zero, the EU should ensure the existing regulations – the Corporate Sustainability Reporting Directive (CSRD), Corporate Sustainability Due Diligence Directive (CSDDD) and European Sustainability Reporting Standards (ESRS) are implemented in a way that works for citizens, businesses and society as a whole.

“Ultimately, competitiveness should be a cornerstone of European policy and the sustainability and technology transformation should be couched in terms of competitive advantage rather than regulatory burden.”

On the same point, the CEO of Perfection42, Simona Vasyte told Euronews: “While the EU has some ground to cover in AI technology and its economic integration, our strength lies in our diversity. Implementing regulations that promote or mandate open-source principles- open data, open AI models- could dramatically enhance competitive dynamics.

“Such measures would democratise innovation, breaking down monopolies and opening doors for a broader range of companies and countries to thrive. This approach not only levels the playing field, but also aligns with the EU’s foundational values of fairness and collective progress.”

When asked what the new EU government can do to keep European businesses invested in the continent, instead of listing in the US or elsewhere, Teigland said: “Europe is facing significant competition for investment, not least from the US, where the Inflation Reduction Act (IRA) has proved to be an incredibly powerful draw for companies that are not already established on the continent.

“The EU should convey a powerful and resolute message: Europe is open for business and its brightest days are yet to come.

“Investors are positive about Europe’s long-term prospects because the economic situation is expected to gradually improve and in the context of rising geopolitical tension, the relative stability of Europe’s major economies is a considerable advantage.

“The new EU Commission should capitalise on this and keep European businesses invested by delivering on the Capital Markets Union project and strengthening European unity through the Single Market.

Regarding this, Vasyte said: “The best thing that comes to mind regarding help from EU governments is to keep the momentum and encouragements of economic collaborations both within the EU as well as with countries outside of the Eurozone. It would be great to have more tech giants in the EU to rival China and the USA.”

Election manipulation using AI continues to remain a concern

Over the past few months, misuse of AI has been widespread, especially in cases such as the Russia-Ukraine war and the Israel-Hamas war, in order to portray misleading information about the progress of these conflicts.

The risks of AI, in terms of deepfakes, privacy violations, weapons automations and stock market volatility and manipulations have also been brought to light extensively. Now, with 2024 being a year of numerous elections across the globe, AI being used to manipulate election results have also been a significant concern.

Referring to this, Vasyte said: “While there might be some risks of influencing voter behaviour with deepfakes, AI can also be used for more inclusive and focused campaigning. What’s important is raising awareness of potential AI use and educate people on how to spot AI-generated content.