We assess the economic implications as populist parties look set to take more control of political agendas in Europe – by Azad Zangana


French President Emmanuel Macron has called for a surprise French parliamentary election following a very disappointing performance of his coalition in the European parliamentary elections.

Early indications are that Rassemblement National, RN (the re-named National Front) won the largest share of votes and allocated seats at the European Parliament. This was in line with a general shift across Europe to right-wing nationalist populist parties (see comments, below). Importantly, RN secured around double the share of votes that the ruling coalition Besoin d’Europe (Need Europe) had won.



RN is known for its anti-immigration, nationalist and Eurosceptic stance, and in recent years has called for greater protectionism, and against structural reforms including higher fuel duties. It also campaigned against the ruling coalition’s decision to increase the state retirement age from 62 to 64 years old.

As a result, success at the French parliamentary elections could result in increased borrowing as tax cuts and subsidies are offered for younger voters. Indeed, markets initially responded to news of the snap election by pushing up the yield on the 10-year OAT, or France’s government bond, by 12 basis points on the day.

That was six basis points more than the increase seen in German Bunds, suggesting some premium already being established to reflect political risk. We will learn more very soon when pledges are communicated ahead of the election.

Besoin d’Europe is made up of Renaissance (previously, La République En Marche!Modem, Horizons, Parti Radical, Union des démocrates et indépendants. The coalition formed a minority government following the 2022 general election, but has struggled in a fractious parliament. A crisis last year unfolded during the difficult passage of the Immigration and Asylum Bill which saw Élisabeth Borne replaced by Gabriel Attal as prime minister.

With the lack of recent voting intention opinion polls, many are using the European Parliament election results as a sign that France may finally be ready for a right-wing nationalist government.

If RN is successful in not only winning, but also forming a coalition majority government, then we can expect co-habitation with Macron remaining as president. This means that he will retain some control (via veto) over some national security issues, but ultimately, the domestic agenda will shift and be led by Jordan Bardella, president of RN.


What about the European parliamentary elections?


Provisional results show that the big winners from the 2024 elections have been right-wing nationalist populist parties. The biggest winner was far-right nationalist Identity and Democracy Group (ID), which is expected to increase the number of seats held by 18%. The European Conservatives and Reformists (ECR) are also right-wing, and saw significant gains along with the largest party, the European People’s Party (EPP).

The Left and Progressive Alliance of Socialists and Democrats (S&D) – hard-left and centre-left respectively – both saw small losses in seats. The biggest losers of the plebiscite, however, were the Greens and liberal (Renew) parties, both losing around a quarter of seats.



Overall, the results should mean that the previous coalition led by the EPP and backed by the S&D and Renew retains control, after winning 56% of seats versus 59% previously. However, the shift towards right-wing populist and nationalist governments will have an impact.

There is a very clear desire to see greater controls and restrictions on inward migration, and there is real unhappiness over the perceived impact of green initiatives, and the cost of such policies.

The notion that Europe can press ahead and decarbonise its economy but without regard of the impact on the competitiveness of its firms has hurt the energy transition agenda. The EU’s Carbon Border Adjustment Mechanism (CBAM), a system of tariffs on imported raw materials that do not adhere to carbon emissions limits and costs, will likely gain further support.

Increased Euroscepticism could also lead to a slowing in the progress of candidate countries joining the European Union. The most notable of which at present is Ukraine, which opened its accession negotiations at the end of last year.

EU accession can take many years and there is no guarantee of success (see Turkey as an example). But a very public stalling or halt to Ukraine’s accession progress could be seen as a political win for Russia.

Despite the above, we do not see the election results impacting the military support from Europe to Ukraine. Many of the Eurosceptic parties, especially those in the Eastern European block, fear the possibility of the further excursion of Russian forces westward, and would not wish to see aid for Ukraine being cut.


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