The results of the elections in Europe are giving the first effects. The euro is at its lowest level against the pound since August 2022. But according to experts, these are the five most important consequences for the economy of the European Union, starting with the rules for the common budget.
The euro weakened against other major currencies on Monday, under pressure from political uncertainty related to the European Parliament elections.
Significant victories by far-right parties across Europe have raised concerns about parliament’s ability to form the necessary majorities from the main parties to pass legislation.
The euro fell 0.45% against the pound, trading at 0.84550 for the first time since late August 2022. At the same time, the euro lost 0.48% against the dollar to 1.07500, hitting a low in just over four weeks.
But in the meantime, what are the five most important consequences in the economy of the European Union, since the triumph of the right changes Europe from the rules for the budget.
For decades, there has been talk about the democratic deficit of the European Union and the indifference of citizens towards its institutions. Brussels seemed like a meeting place for cold and distant technocrats, not a truly ordinary capital. In all European elections from 1984 to 2014, turnout was consistently declining. But now everything is changing. For the second time since 2019, participation in the parliamentary elections in Brussels and Strasbourg appears to be on the rise, while in Italy it is on the decline, as almost all parties ran a perfect campaign to discourage citizens from voting. But the result on a European scale is clear: a European political space is increasingly recognized in the EU, which is permeated by common waves of opinion and political groups compete with each other across national borders. The democratic deficit no longer exists. Hundreds of millions of Europeans understand that the election of their MEPs is important. The winners today are those who did not want this space: the extreme right, the sovereignists, the historically anti-European right; nationalists who are certainly different from each other, but until a few years ago they all wanted to leave the euro or the European Union. Today they have changed their strategy: they prefer to try to change the system from within.
The first consequence of these choices: the circle of impossibility
The first consequence is that the European Union seems caught in a loop of impossibility: everyone (or almost everyone) agrees on the policies that are urgently needed, but to implement them, last night’s winners would have to radically change their position Theirs. Europe has lagged not only behind the United States and China, but also compared to South Korea or the United Arab Emirates in the race for technological progress. Since 2010, European economies have invested between $1,500 and $2 trillion less than the United States, relative to the size of the economy. And this shows, not only in the average income per inhabitant in Europe, which is now a third lower than in the United States. Above all, the EU is far from the leading positions in artificial intelligence, innovative medicines, electric mobility, green technologies and semiconductors. There is no need to talk about the defense either.
The second consequence: Europe towards new budget policies?
Because right-wing nationalist parties in various countries have this special thing: they can boast ideological affinities; but precisely because they are nationalists, as soon as they come to power they will end up clashing with each other precisely on issues of supposed “national interest”. Unless, of course, they deny everything they’ve been and change course 180 degrees. It is precisely the clear possibility that Marine Le Pen’s party will come to government in France in the coming weeks that causes the second economic consequences of yesterday’s elections. And this is directly related to Italy. Because – for those who have forgotten – the ink on the new Stability Pact is still wet. And France and Italy will be under particular scrutiny in the coming weeks, when the European Commission will propose that both enter excessive deficit proceedings, given that their public finances are completely off course. In theory, both countries should present serious and stringent recovery plans in September. But can you imagine a ‘Lepen-ist’ economy minister accepting a decree from Emmanuel Macron that raises taxes or cuts spending?
What the right-wing winners of this European round have in common, apart from their apparent Trumpism, is their fleshly distrust of the real Donald Trump. True, Matteo Salvini of the League and Alternative für Deutschland gave him some credit. But everyone else, starting with Meloni and Le Pen, remained surprisingly silent. They too understand – like their domestic opponents – that a return of Trump to the White House would put Europe’s back against the wall. How can the EU defend sluggish growth if the United States imposes 10% tariffs on all European exports. Because, precisely, the nationalist right is destined to be like this even against ideologically similar governments. And Meloni and Le Pen, deep in their hearts, must be almost as concerned about this as Macron or German Chancellor Olaf Scholz.
The fifth consequence is then easy to imagine : someone in Moscow must have popped champagne last night when they saw the election results in France or the success of Alternative für Deutschland in Germany. He lives in the Kremlin and, of course, is called Vladimir Putin.
