European Elections 2024 and the impact on businesses

Juni 4, 2024

As the European Elections are just around the corner, today’s article will delve into the importance of the elections and how the results might impact businesses.

The 2024 European Parliament elections occur amidst significant political shifts and challenges. Since the last elections in 2019, Europe has grappled with substantial changes, including the global COVID-19 pandemic, economic recovery endeavours, climate change imperatives, and the EU’s renewed focus on achieving energy independence. Between June 6th and 9th, 2024, citizens across Europe will exercise their democratic rights to shape the future of the European Union. The upcoming European Parliament elections mark a significant moment as the newly elected Members of the European Parliament (currently 705, soon to be 720 after the elections) will wield considerable influence in shaping policies, legislation, and the overall direction of the EU for the next several years, until their mandate concludes in 2029. With authority over pan-European legislation and the allocation of the EU budget, including development grants that often benefit underprivileged, the Parliament’s decisions directly influence businesses continent-wide, from setting product standards to shaping trade policies.

While economic recovery and sustainable growth take center stage, does climate change play second role?

Developments after the COVID-19 crisis have shaped political narratives and public sentiment, presenting an opportunity for companies and organizations to influence the new agenda of EU institutions. National-level political parties and the European Commission have begun shaping their agendas for the next legislative term. While pandemic aftermath remains a top priority, political parties are also focusing on post-pandemic economic recovery, job creation, sustainable growth, and strengthening the EU’s single market. These issues are gaining prominence, contrasting with the previous dominance of climate change and decarbonization efforts on the institutional agenda. European Commission President Ursula von der Leyen underscored industrial policy, competitiveness, and addressing digital risks as key priorities during her State of the Union address on September 14th (2023).

While several Member States push for it, the European Commission also recognizes the need for a ‚regulatory pause‘ to assess the impact of current climate legislation on businesses, consumer prices, employment, and the competitiveness of EU industries. Prioritizing financial support to facilitate the green transition over introducing additional green policies into the existing framework is advocated. Meanwhile, the digital revolution continues to reshape societies and economies, with data protection, privacy rights, and responsible artificial intelligence remaining high priorities.

As observed in many global elections today, there’s a noticeable surge in right-wing populist movements. While the European Parliament’s diverse composition makes it challenging for extreme voices to dominate, there’s still potential for shifts in its makeup and overall direction. Recent discontent within member countries has led to setbacks in policy initiatives, particularly concerning environmental protections like the EU’s Green Deal, potentially impacting sectors such as manufacturing if deadlines for electric car production are extended.

Moreover, pivotal decisions await regarding military policies. Amidst a backdrop of global unrest fuelled by various conflicts, nations like the UK and Sweden are openly considering conscription. This, coupled with ongoing migration challenges, may drive heightened expenditures on border security and militarization, potentially impacting budgets in areas like research and development. Given the persisting economic sluggishness in major EU economies like Germany, the Parliament is likely inclined to prioritize business interests.

Trade policies

Trade policy lies at the core of the EU, originally founded on the belief that economic integration would prevent further conflict on the European continent. Today, this principle faces challenges. The outcomes of this year’s European elections will reveal whether trade and economic integration are strengthening or straining the European body politic.

This is significant given the EU’s status as the world’s largest importer and exporter of goods and services, as well as its role in hosting and providing substantial foreign direct investment (including approximately $2.5 trillion to the United States). While this economic engagement historically brought prosperity to European consumers and workers, the model has faltered since the 2008 financial crisis. Relative growth disparities with the United States and China, coupled with high energy costs resulting from ambitious climate policies and disruptions in oil and gas trade with Russia post-Ukraine invasion, have exposed Europe’s vulnerabilities.

Furthermore, political tensions surrounding trade and economic integration in Europe have been mounting steadily. These tensions were somewhat masked during the previous Commission by the chaos surrounding the failed US-EU free trade, including those over European steel and auto exports. However, these experiences have sensitized European politicians, who now prioritize safeguarding Europe’s economy and workers from external threats, including increased Chinese competition and a US trade agenda emphasizing national security and domestic industry.

The EU’s challenges in finalizing trade agreements, protests against agricultural imports, emphasis on „strategic autonomy“ and „economic security,“ heightened use of antidumping and anti-subsidy measures (including against Chinese electric vehicles), and imposition of a „carbon adjustment“ fee on carbon-intensive imports underscore a defensive stance in trade policy.

Scenarios and Risks: Post-Election Dynamics

EU and member-state elections in 2024 may witness a fragmentation of the traditional European consensus on trade, potentially resulting in policy shifts favoured by proponents of national sovereignty and protectionism. This could lead to increased trade barriers and regulatory controls, especially on intra-EU trade and products failing to meet European standards. However, a proactive EU trade policy, leveraging its openness to forge international alliances supporting European interests, could rekindle public support for trade and enhance EU global leadership.

Debates surrounding the EU’s Green Deal and its local-level implementation in sectors like industry, infrastructure, mobility, and energy usage are expected to dominate pre- and post-election discourse. Contentious topics, such as renovating existing buildings for energy efficiency, underscore the significance of these issues at the grassroots level.

It is also highlighted that the socioeconomic impact of such policies, particularly concerning living costs, which can shape electoral outcomes and broader political trajectories. Despite the EU’s historical leadership in clean technology and green manufacturing, there’s a risk of losing ground to global competitors like the US and China, especially in burgeoning sectors like electric cars.

To conclude, the European Elections of 2024 mark a pivotal moment for businesses across the continent. With the outcomes shaping policies, regulations, and the overall business landscape, organizations must navigate through increased political uncertainty, particularly in the aftermath of Brexit and amidst evolving geopolitical dynamics. As the EU Parliament’s decisions extend into various sectors, from energy to taxation, businesses must remain agile, adapt to changing circumstances, and engage with policymakers to mitigate risks and capitalize on emerging opportunities. The elections underscore the critical importance of businesses in shaping and responding to the future trajectory of the European Union.

  

References

Chase, P. (2024, January 29). What’s at Stake in the EU Elections: Trade and Investment. Retrieved from GMF: https://www.gmfus.org/news/whats-stake-eu-elections-trade-and-investment

Dahlström, M. (2024, January 23). How EU elections will make a big local impact. Retrieved from Vattenfall: https://group.vattenfall.com/press-and-media/newsroom/2024/how-eu-elections-will-make-a-big-local-impact

EuroStart Entreprises. (2024, February 19). How European elections in 2024 could affect businesses. Retrieved from EuroStart Entreprises: https://www.eurostartentreprises.com/en/business-advice/how-european-elections-in-2024-could-affect-businesses

Publyon . (2024, January 19). European elections 2024: predictions and implications for European businesses. Retrieved from Publyon : https://publyon.com/european-elections-2024-predictions-and-implications-for-european-businesses/?switch_language=en

 

 

Related Articles

South Africa: economic growth forecast 2024

South Africa: economic growth forecast 2024

To continue the second part of the article series “Economic growth forecasts of 2024”, today’s article brings the focus on South Africa. Today we delve into the forecasts and policies for economic growth in South Africa for 2024. South Africa’s economy is projected to...

IFRS 19: May 2024

IFRS 19: May 2024

In today's article, we will explore the new Accounting Standard, IFRS 19, and the benefits it will bring. The International Accounting Standards Board (IASB) has issued a new IFRS Accounting Standard for subsidiaries on the 9th of May 2024. The new standard, IFRS 19...

Japan: economic growth forecast 2024

Japan: economic growth forecast 2024

To continue the second part of the article series “Economic growth forecasts of 2024”, today’s article brings the focus on Japan. As the Japanese economy has been a trending topic since the beginning of 2024, today we delve into the forecasts and policies for economic...