The 2024 EU elections – What do industry sectors need to look out for?

What sectors should look out for?

We take a look at what impact these elections will have on different sectors over the next mandate.

Financial services

The notion of competitiveness of the EU financial services sector will take a leading role in the next mandate and files originating from the Commission are likely to reflect this. Here are some of the key things that this election result could impact:

1. Green financing files and the adjustments to the Sustainable Finance Disclosure Regulation will come up in this mandate and we are expecting a push back on a number of the requirements. Files such as these are an example of where the right adjusted EPP may well find allies in ECR and ID.

2. There is a record number of open files, which are at risk of getting dropped or having personnel change on the negotiating team. The impact of this will likely be that some contentious matters will be reopened or take a different course.

3. The Capital Markets Union will be a key initiative in the next mandate and is seen as a driver for boosting productivity and growth in the EU. Much has been said about Europe’s fragmented capital markets and how it has fallen even further behind the US and revised proposals seek to address this. However, how it is unclear how much of a concern the increased number of voices against further EU integration will affect this. 

4. There are also discussions around creating a single market for financial services in a bid to mobilise private capital and a retail investment strategy. There are also plans for a European savings product; auto enrolment into a European Savings or Pension Scheme; and the harmonisation of insolvency laws. This again may come against some opposition with the EU encroaching on national sovereignty.

5. There is a push to cut down some of the regulatory burdens on EU companies, in particular disclosure requirements. These discussions are part of the competitiveness agenda and is a bid to help EU companies scale. This is also linked in with the discussions around securitisation to help bank deal with the high capital requirements that they must hold. 

Emerging technology

Notwithstanding 160 or so digital files that passed through the last mandate, digital will still be prominent on the EU agenda next year. That being said, it will have to do so without a number of experienced MEPs who have left the Parliament. In the last mandate EPP and Renew led on a number of these files so it will be important to work with new MEPs to ensure informed policy is developed. Here are some of the key things that this election result could impact:

1. Whilst the AI act has passed, there is still a lot of work to do. Whilst most of this sits outside of the Parliament’s remit with the AI Office within DG Connect leading the work on this, any further legislative proposals will need the parliament’s support. We have already heard that there may be sector specific requirements put in place, whether this takes the form of legislation or regulatory guidance is unclear, but we will await to see the outcomes here.

2. Whilst Markets in Crypto Assets Regulation (‘MiCA’) has been concluded and comes into effect from the end of June, there is still work that could come through the Parliament. The Commission is due to present a report on decentralised finance at the end of this year with industry push to provide regulatory clarity. This along with lending and staking could see the EU publish new proposals or amend MiCA itself. When this comes in, there will be a very different team of people negotiating this, so some of the discussions that held up the file before e.g., Energy consumption could be substituted by new concerns.

3. Discussions towards the end of the last mandate indicated that a key topic could be tokenisation of real-world assets. With the cryptoasset agenda taking up most resources on the blockchain agenda, other applications of the technology fell slight by the wayside in the last mandate. One such use case is around the utility and opportunities that tokenisation brings to the EU economy. Whilst nothing is a guarantee, it is thought to be quite high up the agenda in topics that are to be discussed towards the end of this year.

4. The Digital Euro was already a controversial talking point in the last mandate. With the election of more right leaning MEPs, this could cause further problems to the EU’s plan to develop a Central Bank Digital Currency. Many MEPs already table deletion amendments to the file when it entered the parliament, and it is anticipated that progress on this project will be stalled even further.

5. We should also keep an eye out to how the commission look to tackle other so-called critical technologies such as quantum computing. A lot of the discussion to-date has been centred around research and development, to do so, there will be budget that needs to be allocated and it will be interesting to see how much a right leaning EU will be willing to invest in this.

Defence

One of the key things that will be a priority for the next commission will be defence. Ursula Von der Leyen has already said that she will be bringing in a defence commissioner. However there remains a couple of things that we should look out for:

1. What will the competency of the defence Commissioner be and what budget and bite will it have? At the moment, the competencies that this role seems to have is spread amongst a number of others, e.g. The coordination of production of military weapons is a competency of the Internal Market Commissioner, whilst the High Representative for Foreign Policy runs the foreign relations and diplomacy aspect. Will the new Commissioner take away from these? The discussion at the moment seems to be more economic with a focus on coordinating EU Member States armies and productions to ensure efficiencies.

2. The European Defence Industry Programme’s funding is a fraction of that of Member States and as such will have very little power unless more funding is given. There was discussion around joint borrowing to help raise greater funds and also a change of rules with the EIB to allow the investment into defence. This will no doubt be discussed further once the post is created. It also remains to be seen how this will be funded in the 2028-2034 budget.

The Green Agenda

As mentioned already the elections point towards an easing of the Green Agenda. We have already started to see a watering down of targets and that was before the elections For example: the concessions made to farmers on pesticides; removing the need for the agriculture sector to cut down on menthane and nitrous oxides by 30 percent by 2040; or the messaging around subsidies for fossil fuels. This trend will likely continue. Here are some of the things we might see:

1. Whilst much has already been passed and in the official journal and therefore bind Member States, the concern will be on files that are coming back for adjustments or revisions. It is expected that these targets or adjustments will be quite conservative in comparison to the last mandate. An example is around stopping the production of combustion engines by 2035. It would seem now that this target may be pushed back amidst a growing scepticism towards this and also towards electronic vehicles.

2. It is stated that EUR1.5 trillion would be needed to make the green transition. Whilst nothing has been decided, the results of this elections make it seem increasingly unlikely that this will be delivered. Instead, we may see this money invested into other areas including defence.

3. Teresa Ribera who is Minister for the Ecological Transition of Spain, has made it clear that she wants to be made the EU’s Green Deal Commissioner. Her credentials will certainly push this agenda forward. However, she has said that this is only if it is given great power and as such an executive vice-president role. Given the results of this elections and the compromises that will need to be made, it is unlikely that the Green Deal will be given such a mandate.

Healthcare

Following covid-19, there was a boost in funding for EU healthcare. Whilst it is well reported that funding will be reduced, there will still be some interesting developments in this sector over the next mandate. In particular is the development of the Critical Medicines Act, which looks to prevent the EU’s overreliance on active pharmaceutical ingredients and finished medicines from overseas and instead creates a mechanism to enable the production of this in the EU. Part of this also envisages increased funding for R&D, infrastructure and operating costs. A topic that will be debated as well are state aid rules and exceptions to help achieve these goals.

Authored by Lavan Thasarathakumar.