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Macro Comment EurozoneEuropean Parliament elections: A battle for the future of Europe

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This month's upcoming elections to the European Parliament are set to be particularly important, given the timing of selection processes for key EU leadership positions. In line with improving economic conditions, trust in EU institutions has improved. Although anti-establishment parties are likely to boost their support, riding on anti-incumbent sentiment over immigration policies and pocketbook economics, the probability of translating this into policy shifts within the EU is relatively low. Differences in populist parties' ideological as well as policy preferences are likely to raise barriers to a cohesive eurosceptic bloc. More likely is a coalition including either the greens or the liberals, which if anything ought to result in more EU integration rather than less. Yet the coming bargaining process as the ruling coalition in the European Parliament moves from two to more parties still carries risks, and our view is that this factor will offset the relief of populists failing to gain significant power, with an expected net neutral market impact overall.

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 Erik Meyersson

Erik Meyersson

Senior Economist

Eurozone

erme03@handelsbanken.se

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