CONTRIBUTORS
Zehrid Osmani
Head of Global Long-Term Unconstrained
The current polls show a notably shift to the right, but, in this paper, Zehrid Osmani suggests the potentially greater risk to both the European Union (EU) integration and the markets may come from the French presidential elections in 2027.
Executive summary
European parliamentary elections are taking place between 6-9 June. There is increased momentum from fringe and far-right parties, who have anti-EU integration views. A shift away from the current centrist majority in the EU parliament would put a dent to the agenda of further integration.
Despite the rising momentum away from centrist parties, notably coming from the right, we believe that centrists will manage to retain a majority, even if it is by a slimmer margin. Unless we are wrong-footed in our view, we do not see the EU elections as a major risk for financial markets. Neither do we expect any major policy shifts, with the EU’s focus to remain on the Energy Transition and Security in light of the increased geopolitical risks on its borders.
The real risk for Europe will be in the key member states' elections, notably the French presidential elections in 2027. Emmanuel Macron's presidential term is coming to an end and with his En Marche (LREM) party not having a clear heir apparent to succeed him, it could leave a vacuum in the French political landscape. Marine Le Pen’s far right, anti-EU party, Rassemblement National (RN), could benefit from this vacuum in terms of votes and momentum. This is likely to be the bigger threat to the EU integration agenda over the next two years; something that the market is not quite ready to focus on or pay attention to. That in our view, is where the risk lies.
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