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Freshfields Sustainability

| 3 minutes read
Reposted from Freshfields Risk & Compliance

EU leadership shake-up: implications for business and policy

In the wake of the recent European elections, the EU27 Heads of State and Government have finalised allocating the influential EU top jobs, setting the stage for the next political cycle. The decisions made in these appointments will have far-reaching implications for the European Union's strategic direction and its business environment.

Leadership appointments and political dynamics

Ursula von der Leyen, the current Commission President and a stalwart of the European People's Party (EPP), has been nominated for a second mandate. Her tenure thus far has been marked by a focus on digital transformation, the Green Deal, and navigating the challenges of the COVID-19 pandemic. Her reappointment, however, hinges on securing an absolute majority (361 members out of 720) in the European Parliament – a potentially tight vote scheduled for the inaugural plenary on 18 July.

António Costa, the former Prime Minister of Portugal from the Socialists and Democrats (S&D), has been elected President of the European Council. He replaces Belgian Charles Michel and will serve an initial 2.5-year term. Costa's leadership will be crucial in steering the Council through a period of significant economic and geopolitical challenges.

Estonian Prime Minister Kaja Kallas, representing the liberal Renew Europe group, is poised to become the new High Representative for Foreign Affairs and Security Policy. Her appointment awaits confirmation from the newly elected President of the Commission and the European Parliament, following public hearings expected in October and November.

Roberta Metsola, the current President of the European Parliament and a Maltese MEP from the EPP, is likely to retain her position. This leadership configuration, if confirmed, would see two top roles going to the EPP, one to the Socialists and one to the Liberals. Notably, the European Conservatives and Reformists (ECR) group, despite significant gains in the parliamentary elections, have been excluded from the top jobs, prompting discontent.

Strategic agenda for a renewed Europe

Simultaneously, the EU27 adopted its Strategic Agenda, which outlines the political priorities for the next five years. This agenda is structured around three pillars: a free and democratic Europe, a strong and secure Europe, and a prosperous and competitive Europe. The strategic vision underscores the EU's commitment to long-term competitiveness, climate neutrality, and digital transformation.

The agenda emphasises the EU’s commitment to providing a stable and predictable framework for businesses by strengthening strategic sectors, securing supply chains, and enhancing financial integration to boost competitiveness. Investments in green and digital infrastructure are highlighted as vital to creating jobs and maintaining the EU's competitive edge. Efforts to reduce regulatory burdens and simplify administrative procedures aim to foster a business-friendly environment.

The EU's goal of achieving climate neutrality by 2050 remains a central theme. The strategic agenda calls for scaling up Europe’s manufacturing capacity for net-zero technologies and products, reflecting a desire to reconcile environmental ambitions with economic growth. The introduction of additional own resources to fund these initiatives indicates a proactive approach to financing the green and digital transitions.

Security and geopolitical strategy

Security initiatives have been given heightened importance, focusing on supporting Ukraine, increasing defence spending, and strengthening collaborations with global partners. The agenda also prioritises EU enlargement, particularly for Ukraine and Moldova, and addresses migration challenges with a balanced approach that includes border protection and facilitating legal migration.

The influence of right and far-right political forces, which gained momentum in the recent elections, is evident in the agenda's stronger emphasis on border management and tackling irregular migration. The commitment to managing the EU's external borders reflects a broader consensus on security and migration issues.

Digital transformation and regulatory framework

On the digital front, the agenda underscores the importance of telecommunications, connectivity, and data interoperability. The promotion of the EU digital identity and the call for tech giants to safeguard democratic dialogue online highlight the EU's commitment to a secure and inclusive digital landscape.

The strategic agenda also emphasises maintaining a balanced and effective state aid and competition framework, ensuring that SMEs and start-ups remain central to Europe's economic and social fabric. This focus on regulatory stability is designed to create a supportive environment for business growth and innovation.

Sustainability and supply chain resilience

Sustainability remains a key focus, with continued emphasis on net-zero and low-carbon solutions. Notably, the final version of the strategic agenda includes a new reference to strengthening water resilience across the EU, reflecting an adaptive approach to emerging environmental challenges.

The agenda also highlights the importance of reliable supply chains and reciprocal market access opportunities. This approach aims to create a level playing field and enhance the EU's global economic position.

The allocation of the EU’s top jobs and the adoption of the Strategic Agenda mark significant steps in shaping the future of the European Union. For businesses and investors, these developments offer both opportunities and challenges. The EU's commitment to long-term competitiveness, climate neutrality, and digital transformation, coupled with a focus on security and regulatory stability, provides a comprehensive framework for growth and innovation. As Europe navigates this new political landscape, Freshfields stands ready to help clients leverage these changes, offering insights and expertise to thrive in an evolving market.


2024 elections, antitrust and competition, climate change, corporate, esg, eu digital strategy, europe, financing and capital markets, investment, private capital, regulatory, regulatory framework