Euroscepticism will not bring the EU down

Economic opinion

At the end of May, EU citizens will go to the polls to elect a new European Parliament (EP). The rise of populist and Eurosceptic parties in various EU countries fuels the idea that the election results will have a major impact on the EU’s continued existence. This assertion deserves some nuance. The expected distribution of seats indicates clear progress for Eurosceptic parties, but the traditional and more moderate groups are still expected to make up the largest group in the EP. In addition, the differences between the Eurosceptic parties are great, which makes cooperation more difficult. There are also differences between parties within the moderate groups, but their predominantly pro-European philosophy has bound them in the past and will likely continue to do so in the future. We therefore do not foresee a drastic change in policy in the EU, but we do expect more difficult decision-making and a brake on further integration.

Populists parties motivate voters

In many EU countries, media attention for the EP elections has never been higher. This is mainly due to the rise of populist and Eurosceptic parties all over the EU. Their promise to change the direction of the EU after the elections motivates their supporters to go to the polling booths.

The increased interest in the elections is a clear break with the past. In recent years, the turnout rate for the EP elections has fallen systematically, from 62% for the first election in 1979 to a low of 43% for the most recent election in 2014 (see Figure 1).

Figure 1 - Attendance at elections to the European Parliament (in %)

Source: KBC Economics based on European Parliament

In the UK, a country with a low turnout of about 35% in 2014, the media attention surrounding the EP elections is considerably higher than before this year . This is partly because pro-Brexit politicians threaten to use the elections to boycott the EU from within, despite the explicit promise in the extension agreement that the UK will not block the decision-making process in the EU. EU sceptic Nigel Farage’s Brexit Party is at the top of the polls (see figure 2), promising to pursue a hard brexit, without any deal. His simple message resonates well with many disappointed Brexiteers and motivates them to go to the ballot box. In total, the UK will fill 73 EP seats. Some of these seats will be removed, and some will be refilled once the UK leaves the EU.

Figure 2 - EP poll in the United Kingdom (3-poll moving average, in %)

Source: KBC Economics based on Poll of polls

No majority for Eurosceptic parties

There are currently nine political groups in the European Parliament, each made up of national parties with common convictions. There are currently populist and Eurosceptic national parties in almost all groups, including the moderate ones. If we add together the expected seats of all the populist parties, irrespective of their group, we arrive at a rise in their share of seats to around 30%. The rise is mainly concentrated with the parties on the right-hand side of the political spectrum.

Despite the expected rise of eurosceptic seats in the EP, the more moderate parties will retain the majority of seats in the EP. At present, the largest groups in the EP are the European People’s Party and the Progressive Alliance of Socialists and Democrats. The current opinion polls predict a fall in their combined share of seats from 55% to less than 44%. In order to get proposals through Parliament, they will therefore need the help of third parties. If we add the moderate residual category (which includes moderate parties that do not belong to one of the large groups) and the liberal ALDE to the result of the EPP and S&D, we arrive at a seat percentage of 60% (previously 64%). Therefore, even after the May elections, the moderate groups and parties are likely to be able to achieve majorities, even if some Eurosceptic national parties were to exchange the moderate groups for new or existing Eurosceptic groups.

Don’t overestimate their impact

Not only the rise of the Eurosceptic parties itself, but also their impact should not be overestimated. Firstly, because the differences between the eurosceptic parties are very big. On the one hand, there is the left-right division. On the other hand, the ideological views within the right spectrum range from mild eurosceptic and national-conservative to outspoken anti-EU and radical right-wing. Moreover, they also fundamentally disagree on how certain policy challenges should be tackled, such as the redistribution of refugees among the EU Member States, and on the preferred relationship with Russia. This makes cooperation more difficult.

In addition, the rhetoric of the anti-European parties has softened in recent years. Whereas many parties spoke of an exit from the EU not so long ago, this point has since been removed from many election programmes. The difficult and sometimes absurd brexit process is the main reason for this. Moreover, many parties also see the benefits of the EU and are therefore focusing on changing the EU from the inside out. These changes should not be overestimated either, however. After all, history has proven that even the most extreme parties, once elected, are often willing to compromise. For example, both the Greek Syriza and the Italian coalition between the Lega and the Five-Star Movement adapted their generous budget plans under pressure from the EU and the financial markets.

Moreover, the extensive power of the EP is not unlimited. For one, the EP is not the only legislative and budgetary body in the EU. Many powers are shared between the EP and the Council of the EU and the EP itself cannot initiate legislation or appointments. The EP does, however, have an important veto power with regard to accession and association treaties and the final Brexit agreement. So while the EP can prevent further integration, it will take more than just a majority of seats in the EP to fundamentally change the direction of the EU.

In summary, we can say that the expected rise of Eurosceptic parties in the EP will probably complicate the decision-making processes and the further integration or enlargement of the EU, but that it will not cause a disintegration the EU.

Disclaimer:

All opinions expressed in this publication represent the personal opinions of the author(s) at the date stated therein and are subject to change without notice. KBC Groep NV makes no warranties as to the extent to which the scenarios, risks and forecasts proposed reflect market expectations, nor as to the extent to which they will actually materialise. All forecasts are indicative. The data in this publication are general and purely informative. The information cannot be considered as an offer to sell or buy financial instruments. Nor can it be considered as investment advice, investment recommendation or "investment research" within the meaning of the law and regulations on the markets in financial instruments. Save the express prior and written consent of KBC Groep NV, any transfer, sale, distribution or reproduction of the information, publication and data is prohibited, regardless of form or means. KBC Groep NV cannot be held liable for the accuracy or completeness of the information or for the direct or indirect damage that would result from the use of this document.

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