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FxWirePro: EU election outcome limits political risk for the euro

The European parliamentary election has once again failed to be one of the most important events for Europe in the modern era with a very low turnout of 51 percent but it definitely proved to be an important election. Voter turnout reversed its declining trend for the first time in decades.

  • The election outcome according to counting so far has limited the broader political risk for the Euro, as pro-European parties are likely to win two-thirds of the seat in 751 members’ parliament. The Eurosceptic parties have gained in strength but not sufficient to challenge the pro-Europeans yet.

Nevertheless, there has been some serious upset.

  • As expected, the Brexit party in the United Kingdom has won a majority of the votes and will have most seats in the European Parliament among the UK parties. The outcome was devastating for the ruling Conservative Party, as well as the main opposition - Labour Party. Brexit party, led by Brexiteer Nigel Farage won 31.7 percent of the votes, while Labour and the Conservative Party together won 22.8 percent of the votes. The expressed disgust towards the traditional established parties could prove decisive in the next election.
  • Another major upset was in France, where President Macron’s party that won the last election decisively, came in second place behind National Rally, led by Marine Le Penn, which won 23.5 percent of the votes.
  • Germany also witnessed significant changes. Chancellor Angela Merkel’s Christian Democratic Union (CDU) and Christian Social Union (CSU) coalition saw vote bank bleed significantly but won the majority of the votes.

The biggest winners across the continent were Eurosceptic parties, Pro-European liberal non-establishment parties, and the Greens, while established pro-European parties and socialists were the biggest of losers.

While the economic and foreign policy risks continue to hang over the euro, with this election, the political risks have significantly diminished.

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