Views from Brussels and national capitals across Europe on the implications for businesses, focusing on the financial services, energy and technology, media and telecommunications sectors.

1. Brunswick Group 26 May 2014
Talking Politics
No watershed moment,
but not quite business as
usual for Brussels
The European Parliament elections have crowned the centre-right EPP as winner,
but showed again that there is a persistent gap between political decisions taken in
Brussels and voters’ expectations in Member States. Voices from the extremes of the
political spectrum have been amplified, while the centre-right, liberals and the
greens all lost seats. Despite the shockwaves this has sent through Europe’s media,
we don’t expect the gains by the far right and far left will translate into a complete
overhaul of EU policy over the next five years. However, the way a parliamentary
majority can be formed is certainly going to be affected.
Potential implications for business
 Legislation will be more tailored towards political centre despite rise in
fringe parties
 Member States whose governments lost to Eurosceptic populists more
inclined to take on some of those views
 Big data, energy and financial services to dominate the political agenda
This in turn will affect how important legislation will be handled during this parliamentary term. Such change comes at a crucial moment, when
for example certain key aspects of the banking union still need to be implemented and agreed upon. At the same time, decisions in other policy
fields that will form the long-term perspective of economic growth in the EU also have to be taken. This note analyses the next steps in the
political process that started with the elections and ends with a new European Commission taking office later this year and also looks at
implications for areas such as financial services, technology and telecoms, energy, and TTIP. Moreover, views from the EU’s major national
markets will complement and complete the analysis.
Look out for…
 A power struggle between Member States and the European Parliament
over the election of the next European Commission President
 The possible creation of a new Subcommittee for the Eurozone and a
Committee for Digital Affairs

The low turnout will make it
easier for Member States to
nominate their preferred
candidate for the position of
European Commission
President.
214
18966
42
52
46
38
104
Projected seat distribution 2014-2019
(All figures are based on EP projections at 07.00 CET)
EPP (centre-right)
S&D (centre-left)
ALDE (liberal)
GUE/NGL (left)
Greens/EFA (green)
ECR (conservatives)
EFD (eurosceptics)
NI (non-aligned)
57%
50%
45%
43% 43%
1994 1999 2004 2009 2014
Voter turnout
remains low

2. Following the groups’
formation, MEPs will then
decide on their new
President, Vice-Presidents,
and Committee Chairs.
Expect a lot of horse trading
and backroom deals.
What is Next?
Shifts in the balance of power will lead to informal
grand coalition
The overall balance of power in the new European Parliament
remains largely unaffected, but the political centre still lost out to
fringe parties. However, the likely formation of an informal “grand
coalition” between the centre-right EPP and the centre-left S&D
groups will bring more substantive change to the way the European
Parliament works. Unlike in the previous Parliament, there are no
other possible constellations of either centre-left or centre-right
groups that can gather enough MEPs to adopt legislation. As a
consequence, the kingmaker role of the liberal ALDE group is
significantly reduced.
A second major change will most likely be the formation of a
political group of far right parties. While this would increase their
public profile considerably, the different political
views within such a group are too heterogeneous to
make any real impact on the policy formulation
process. However, their increased presence will be
felt in the Council, as national governments attempt
to counter the raising influence of these fringe
parties back in their home countries.
Formation of political groups
The national parties will convene over the next five
weeks to form their political groups. Several old and
new delegations will have to make a difficult choice
where to sit. For example, the future affiliation of Germany’s
Eurosceptic AfD, Italy’s populist Five Star Movement, and Belgium’s
N-VA are still unclear. The future of the ECR and the EFD might
also be called into question, as both of them more or less depend on
the British delegations and their decisions.
Election of European Commission President
The big unknown is still how the Member States and the European
Parliament will agree on a new Commission President. The EPP’s
main candidate Jean-Claude Juncker already stated he expects to be
the next Commission President, but Member States are eager to
retain their prerogative in nominating the candidate. Leaders of the
old European Parliament will gather this week to analyse the
outcome of the elections, as will national heads of state and/or
government. Member States are expected to give a mandate to the
European Council President Herman van Rompuy to start
consultations with the Parliament. A power struggle between the
Parliament and the Member States is likely to derail the ordinary
timetable of electing the new Commission.
Summer Timeline
Financial Services
Attempts to regulate financial markets have made the Economic and
Monetary Affairs Committee (ECON) the linchpin of parliamentary
work over the last five years. We are now seeing a gradual slowing
down of new legislative proposals by the European Commission. The
banking union is nearing completion with a Single Supervisory
Mechanism (SSM), a Single Resolution Mechanism (SRM) and a
Deposit Guarantee Scheme (DGS) already decided. The only major
policy proposal still at an early stage is the restructuring of the
banking sector.
Therefore, over the next five years, we predict more ‘business as
usual’ for the ECON Committee. Yet major technical and political
decisions still need to be taken by the European institutions and
authorities. The focus will shift to reviews of current legislation as
well as level 2 implementing decisions.
All this will have to be done under a new
leadership, as ECON Chair Sharon Bowles
(ALDE, UK) did not stand for re-election.
Candidates for the position of ECON chair include
a small number of key MEPs from Germany, the
UK and France, who have served on the ECON
Committee in the past and possess the necessary
experience for the job. Othmar Karas MEP (EPP,
AT), despite being from a small Member State,
would also be such a potential candidate.
Another key development to look out for will be
the possible creation of a new Eurozone Subcommittee. MEPs
discussed such a possibility during the end of their last term, but
ended up not taking a decision, effectively leaving the question for
the new EP. MEPs have been looking for a way to counter the
growing influence of the Member States in financial legislation, and
the instalment of a Euro Subcommittee might be a feasible response.
Contact Brunswick Brussels
Address
27 Avenue Des Arts
1040 Brussels
Belgium
Tel.+32 2 235 6510
Fax+32 2 235 6522
Email
brusselsoffice@brunswickgroup.com

3. Technology & Telecoms
Big Data
The transformative power of internet and big data has been a part of
the European electoral campaign itself, evidenced by a frenzy of
social media activities by all sorts of candidates, EU institutions and
stakeholders alike. For businesses of all background, big data is
becoming more and more essential to their core business activities,
rather than something that is confined to their IT departments. This
debate on big data has only just begun, and it will determine the
work programme of the new European Parliament in the years to
come.
The General Data Protection Regulation still needs to be negotiated
between the European Parliament and the Member States, who
themselves have yet to agree on a compromise that satisfies both data
protection and privacy concerns as well as the well-being of the
wider economy that is dependent on the free flows of information.
Related to this legislative dossier are a range of other policy fields
where the EU has been active or initiated legislation. Completing the
digital single market, cloud computing, intellectual property and
copyright reform, and the question of government surveillance are
all connected to each other in the sense that big data plays a role in all
of them. The upcoming Commission “Communication on a data-
driven economy” will be one of the first dossiers to look at for the
new Parliament. The Civil Liberties, Justice and Home Affairs
Committee (LIBE) will therefore see an uptake in external interest
and legislative activities, meaning that new and returning MEPs in
this Committee will quickly find them at the centre of one of the
most important political debates in the EU. Some MEPs have also
suggested the establishment of a new ‘Digital Affairs’ Committee
dedicated entirely to digital issues.
Telecommunications
The European telecommunications sector is looking at a new wave of
consolidation and M&A activities. German Chancellor Angela
Merkel recently stated she is in favour of further consolidation in the
sector. Therefore, we expect the issue to remain high on the radar of
EU public officials. When the hearings with nominees for the next
European Commission take place in the European Parliament, we
expect the new Competition Commissioner to be grilled on his or
her views on past merger and consolidation cases in the
telecommunications sector.
Energy
Developments in the Ukraine and the European Commission’s
proposals for a 2030 framework on energy and climate policies have
brought the ‘energy question’ back on the European agenda. The
upcoming Italian Council Presidency is committed to reaching an
agreement on the 2030 framework and bridging the existing gap
among Member States.
In addition, the European Commission will present its in-depth
analysis and action plan on how to reduce the EU’s dependency on
Russian gas imports this week, and the question is sure to be picked
up by the new European Parliament, most likely in the form of non-
binding resolutions or an own-initiative report until a formal
legislative proposal is presented.
It is worth noting that in East European Member States parties with a
strong anti-Russian stance have managed to gain considerable support
over the last couple of months, with the best example being the Civic
Platform of Polish Prime Minister Donald Tusk, which came in first
in Poland after having trailed the oppositional Law and Justice Party
in polls for over a year. The Polish government will take this result
as an encouragement to continue pushing forward with its plan for an
‘Energy Union’, which asks for joint gas purchasing by the EU. Also
look for Poland to make a push to ensure the Energy or Foreign
Affairs portfolio for their next EU Commissioner.
It is also significant that in two key Eastern European Member States
national elections will take place in 2014/2015: Poland will hold
presidential and parliamentary elections in 2015, and Latvia, which
will take over the Council Presidency from Italy in the first half of
2015, is set to hold its general election in October 2014.
The upcoming international climate change conference in Paris is
expected for 2015, where countries will try to negotiate a legally
binding and universal agreement replacing the Kyoto protocol. An
improving economic outlook might lead to more openness by
European leaders for a comprehensive deal, a policy that the
European Parliament is likely to pursue as well.
TTIP
The outcome of the elections could also have an impact on the
negotiations surrounding the Trans-Atlantic free trade agreement
TTIP. This will need to be approved by the European Parliament and
Member states before ratification (probably in late 2015). Marine Le
Pen of the French National Front has been clear that she would
oppose the agreement. The EU Greens (in conjunction with their US
counterparts) have already stated that the agreement is a threat to
democracy, and many of the Socialist and some EPP MEPs in the last
Parliament have expressed concerns about the investment protection
aspects of the agreement, which they see as potentially overturning
decisions by national governments. The make-up of the new
Parliament is likely to reinforce these views. The largest UK party,
UKIP, has not taken a definitive stance – on the one hand, they want
free trade with non-EU countries, on the other do not want the EU
negotiating this for them.

4. Views from the Capitals
Germany
96 MEPs
72 MEPs ran
66 MEPs re-elected
30 Newcomers
Four points should be noted after the EU-election. The number of voters
participating in the election has increased. The Euro-sceptical – though not
Europe-sceptical - party AfD (Alternative for Germany) has won about 7%.
The conservatives remain the strongest force but have lost a huge number of
votes to the AfD. And the Social-Democrats have made remarkable gains.
In short, all this means Germany's Chancellor Angela Merkel (CDU)
has a problem now. Although Germany is governed by a grand
coalition of Conservatives and Social-Democrats Merkel cannot
claim the success of the SPD for herself and her tranquil way of
handling European problems. It may well be that the SPD was
successful because it was her German candidate Martin Schulz who
ran against the Luxembourgish EPP candidate Juncker - and not so
much Merkel's political mistakes.
But what must concern her is the success of the AfD. This party is
often described as being right-wing. This is too simple. The AfD was
founded because of widespread concerns about the Euro. It finds its
supporters in the ranks of young, modern, well-educated people
who feel that Europe would be better off without the European
currency. These people do not trust in Merkel's politics.
Merkel has to find an answer for these people. She knows that there
is no way out of the Euro. As one of the most export-orientated
nations in the world Germany is dependent on Europe being
successful just as Europe is dependent on Germany. Merkel knows
that she has to show solidarity in supporting weaker and less
fortunate European countries. This means that she will not call for a
completely new European monetary policy or the dismissal of certain
states from the Eurozone. But she must find a better and more
convincing way of explaining why there is no alternative. As a result
this might lead to a sharper tone in future debates about Europe.
Germany - Preliminary results
France
74 MEPs
53 MEPs ran
34 MEPs re-elected
40 Newcomers
France woke up this morning in shock as the far-right Front National became
the leading political force, capturing 25% of total votes and 24 MEPs, vs.
6.34% and 3 MEPs in 2009.
The conservative UMP was too divided about Europe to come first,
with 20.8% (a 7 point decline since 2009), the Socialist Party hit a
record low (14%, less than an already low 16.5% in 2009) in spite of
a bad performance by the Greens (8.9% vs.16.3%), and the pro-
European centre lost momentum when Jean-Louis Borloo was forced
to retire from politics (9.9%). The far-left Front de Gauche reached
6.3% (6.1% in 2009). Turnout was higher than 5 years ago (43.5%
vs. 40.7%): clearly many of François Hollande’s 2012 voters stayed
at home, not the discontent.
Though no one believes this result can be a good indicator for future
national elections, it is a striking signal of rejection by the voters of
both the European construction as it functions today and the French
Socialist President and Government. The first one to pay the price
will probably be President Hollande and not his PM Manuel Valls,
too new on the job to bear the responsibility of this defeat. The
second one is the country, again weakened in the EU. The third one
is Europe, assuming a strong and balanced German-French
partnership is necessary to its development.
It is likely that this vote will mean France will have to take a stronger
stance against free-trade, immigration issues, austerity-only policies
and economic integration: lately the TTIP, Schengen and the euro
were the major issues in the campaign and fuelled French fears.
Should the EPP retain the majority in the EP, it will be difficult for
President Hollande to reject Jean-Claude Juncker as the next
Commission president. Among potential French Commissioners,
former Economy and Finance Minister Pierre Moscovici has a lead
vs. Elisabeth Guigou, Chair of the National Assembly’s Foreign
Affairs Committee. The name of Pervenche Bérès, respected French
MEP and close to F.A Minister Laurent Fabius has recently been
mentioned as an alternative.
France - Preliminary results
35.3%
27.3%
10.7%
7.4% 7.0%
3.4%
8.9%
0.0%
10.0%
20.0%
30.0%
40.0%
20.8%
14.0%
8.9% 9.9%
6.3%
25.0%
14.6%
0.0%
10.0%
20.0%
30.0%

5. United Kingdom
73 MEPs
In the United Kingdom, the European election campaign has been essentially
inward looking, with little or no focus on the question of Europe, and a
disproportionate amount of coverage of the rise of UKIP and the major
political parties’ increasingly desperate efforts to counter their surge.
This bitter debate has been typified by an ongoing polemic on
whether UKIP is a ‘racist’ party, which their leader Nigel Farage has
robustly rejected in a series of high profile media interviews.
The results of this acrimonious campaign suggest that these efforts
have been in vain, with UKIP now the largest party in the British
caucus, having achieved a record 27.5% share of the vote – ahead of
the Labour Party on 25.4% and the Conservatives on 23.9%.
Though perhaps not the slam-dunk result for the eurosceptic party
that some predicted, they are declaring it as a major victory, and Mr
Farage has stated that the “UKIP fox is in the Westminster hen
house”.
This result can only make life more difficult for British business.
Looking back 15 years, the British caucus, while divided along party
lines, was cohesive and influential with several key committees in the
European Parliament chaired by UK MEPs. Following the
Conservative party’s exit from the largest EPP party block in 2009
and with UKIP ideologically opposed to any kind of constructive
engagement, these key roles will now largely be filled by MEPs from
other countries. This begs the question, who will help British
business engage in the policy debate and input into the formation of
legislation?
Whether the strong UKIP performance will carry through into the
General Election in May 2015 is hotly debated. Traditionally
however, parties which have benefitted from a protest vote at mid-
term elections have not experienced the same success in national
elections, partly as a result of the ‘First Past the Post’ electoral
system and partly as traditional supporters turn back toward the
more familiar parties.
UK - Preliminary results
Italy
73 MEPs
While eurosceptic forces also gained support in Italy, the first national
election ever faced by the 39-year-old new Prime Minister Matteo Renzi
turned out as a triumph for the 80-day-old Italian Government.
According to the almost final results (ballots in Italy closed at 11pm),
the Democratic Party (PD) - led by the unelected Prime Minister -
gained almost 41% of the votes, the best results ever.
The anti-establishment movement led by the former comedian Beppe
Grillo, which stunned Europe by winning 25% of the vote in last
year's general election, came in second place with only about 21% -
or half of the votes of the Democratic Party.
More than being a vote about Europe, yesterday’s elections in Italy
were also a test of Renzi’s political legitimacy and his ability to meet
the challenge posed by Grillo's proven appeal to an angry electorate
disillusioned by recession, unemployment and rampant political
corruption.
With Italy facing the risk of a return to recession after its economy
contracted in the first quarter, these unexpected results will
probably translate into more support for the ambitious economic and
constitutional reforms the premier has promised, but so far has only
partially delivered.
Forza Italia, led by the former Prime Minister Silvio Berlusconi -
weakened by party infighting and forced to serve a community
service order for tax fraud that requires him to spend four hours a
week at a home for Alzheimer's patients - only got around 16 per
cent of the votes. It is now unclear if Berlusconi will keep supporting
the efforts of the government to change the ineffective Italian
electoral laws. But yesterday's vote showed very strong popular
support for Mr Renzi’s ambitious program of tax cuts, labour
reforms and sweeping changes to the system of government on the
eve of the Italian Presidency of the EU starting on 1st of July.
Italy - Preliminary results
23.9% 25.4%
27.5%
6.9% 7.9%
2.4%
6.0%
0.0%
10.0%
20.0%
30.0%
40.9%
21.1%
16.7%
6.2% 4.4% 4.0% 6.7%
0.0%
10.0%
20.0%
30.0%
40.0%

6. Austria
18 MEPs
13 MEPs ran
10 MEPs re-elected
8 Newcomers
Despite a loss of votes, EU parliament Vice-President Othmar Karas has led
his personality election under the banner “O.K.” to a successful conclusion for
him and the Austrian People’s Party and managed to maintain the first
position (27.4%).
The Austrian Social Democratic Party with its independent top
candidate could only increase its vote marginally and clearly stays in
second place (23.8%). The right-wing National Freedom Party
(19.5%) and the Green Party (15.1%) posted increases, the new
liberals Neos (7.9%) immediately succeeded in getting into the EU
parliament. The turnout was 45.7%.
The results come as a relief for the governing grand coalition of
Chancellor Werner Faymann (Social Democrats) and Vice
Chancellor Michael Spindelegger (Christian Democrats). Especially
for Spindelegger another electoral defeat would have spelled
problems, as his position as leader of his party has been questioned in
the past.
The Freedom party, Austria’s biggest opposition party and one of the
potential national delegations for a new far right group, are the
evening’s big winners, doubling their number of MEPs from two to
four. This has not so much to do with discontent over the ruling
parties, but more with the fact that Hans-Peter Martin, who won
more than 17% of votes in 2009, and tried to make a name for
himself as a crusader for transparency and against lobbyists in the old
Parliament, did not stand for re-election.
Two smaller opposition parties, the Greens and the newly formed
liberal party NEOS, also put in strong results. The Greens managed
to secure their third mandate, and NEOS, who last year entered
Austria’s Nationalrat for the first time, gained 7.9% and will send
one MEP to the Liberal ALDE group.
A number of smaller, mostly anti-European and far right parties did
not manage to pass the threshold for election.
Austria - Preliminary results
Sweden
20 MEPs
14 MEPs ran
12 MEPs re-elected
8 Newcomers
In Sweden, voter turnout exceeded that of 2009, increasing from 45.5 % to
48.5 %. This is partly explained by the upcoming Swedish parliamentary
election in September, which raised the general ‘political temperature’ and
makes the campaign for the European elections a lead-in for the national one.
The result of the election is a setback for the largest party in the
centre-right government, the Moderate Party (Moderaterna). The
party of Prime Minister Reinfeldt failed to improve on its meagre
result in the last European election and lost one seat. One of its
coalition partners - the Liberal People’s Party (Folkpartiet
Liberalerna) – saw a decrease in support compared to its strong
performance in 2009, causing it to lose one of its three seats. The
other members of the Government coalition, the Centre Party
(Centerpartiet) and Christian Democrats (Kristdemokraterna), both
performed in line with expectations and retained their respective
mandate.
The centre-left Social Democrats (Socialdemokraterna) remain the
biggest national delegation with six seats. This bodes well for the
opposition in the upcoming national elections due to the strong
performance of the Greens (Miljöpartiet de gröna) – who came in
second and grabbed one additional seat. This was also the first
election for the leader of the opposition, Stefan Löfven, since he took
over the Social Democratic Party. The strong showing of his party
will strengthen his position ahead of the general elections in autumn.
The election also saw the entrance of two new parties. The far-right
populist Swedish Democrats (Sverigedemokratena) captured two
mandates, and the Feminist Initiative (Feministiskt initiativ) one. It
remains to be seen which political group these newcomers will join.
The Swedish Democrats have expressed a will to join the Eurosceptic
Europe of freedom and democracy (EFD) group, but it might not be
welcomed there by the UK Independence Party, which does not
want to be associated with the Swedish Democrats. Another option
for the Swedish Democrats would be to join the potential new far
right group that is likely to form as a result of the elections.
Sweden - Preliminary results
27.3%
24.2%
20.5%
13.9%
7.6% 6.5%
0.0%
10.0%
20.0%
30.0%
13.6%
10.0%
6.5% 6.0%
24.4%
6.3%
15.3%
9.7%
5.3%
2.9%
0.0%
10.0%
20.0%