Week Ahead (8 July)

W/C Monday, 8 July – Tactical withdrawals sees National Rally come third; horse-trading on who will lead a new government to begin  

Yesterday, France held its second round of parliamentary elections. The left-wing New Popular Front (NFP) defied polls and expectations, securing 188 seats in France's 577-seat National Assembly. This result placed the NFP well ahead of Marine Le Pen and Jordan Bardella’s National Rally (RN), which came third with 142 seats, despite previously leading in the first round with 34% of the vote. President Emmanuel Macron’s centrist "Ensemble" coalition outperformed expectations to come second with 161 seats. The conservative Les Republicans finished with a modest 86 seats. The first round results increased pressure on Macron’s alliance and the left bloc to avoid splitting the vote, thus, over 210 candidates from these camps withdrew to decrease the likelihood of the far right taking power. 

With no single party or alliance able to form a majority, France is heading for weeks or months of political paralysis. Various factions will attempt to form a coalition that can provide at least a minimal level of governance until another election is potentially called. Despite coming first, the NFP fell well short of securing the required parliamentary majority of 289 seats, rendering the ‘’cohabitation’’ scenario unlikely. 

The NFP is made up of various parties including the far-left La France Insoumise, Socialists, Greens, and Communist. Jean-Luc Mélenchon, whose party dominated the left-wing alliance by winning 78 seats, insisted yesterday that his group’s platform be put into action “as early as this summer” and, if necessary, “without a vote and by decree.” However, potential candidates for the prime minister role are expected from the moderate wing of the NFP, mainly the Socialists. NFP has a bold progressive agenda, including significant policy pledges such as lowering the retirement age to 60, raising the minimum wage to €1,500 net per month, and increasing public spending on healthcare, education, and housing. Nevertheless, any compromise on its electoral pledges would make the coalition subject to internal divisions and would also draw criticism from its more radical factions. 

New legislative elections cannot be called for a year, leading to potential stagnation in governance. If no coalition emerges, Macron could appoint a government led by a high-level civil servant or non-partisan figure to run the country until another election, possibly in June 2025. This government would need to pass a budget in the autumn but would be vulnerable to no-confidence votes.  

Macron has told EU counterparts France will continue to play a leading role in the bloc. However, this election outcome will likely deprive him of a government committed to his policies. In either case, a heavy question mark would hang over some of his boldest initiatives — from joint EU borrowing to fund defence spending by doubling the EU budget to deploying French troops inside Ukraine to train Kyiv's forces.  

Despite the setback it faced in the second round, RN's increased presence positions it strategically as a leading opposition force, which may help Marine Le Pen in the 2027 presidential election.  

W/C Monday, 8 July – European Commission likely to announce whether to approve sale of majority stake in Urus Group by Pon Holdings to CVC 

This week, the European Commission is likely to announce its decision on whether to approve the sale of a majority stake in Urus Group by the Dutch transportation firm Pon Holdings to CVC, the British investment firm.  Announced last month, the deal is valued at over €600 million. 

The US-based Urus Group, known for its significant contributions to the genetics and agricultural industries, comprises several specialised companies, including Alta, Genex, Jetstream, Trans Ova Genetics, Peak, SCCL, and VAS. The group employs 2,100 people and reported a turnover of €427 million last year. 

The planned sale to CVC represents a strategic move by Pon Holding, aiming to leverage the financial strength and expertise of the investment firm to further enhance Urus Group’s market position and growth prospects. Nevertheless, specific details regarding the percentage of the stake and conditions of the transfer remain undisclosed. 

The parties filed a notice of the proposed deal to the European Commission on 12 June. Although the Commission’s deadline for Phase 1 of the deal is on 17 July, a decision is likely this week. 

Tuesday, 9 July – First House of Commons meeting following Labour’s landslide victory 

The first parliamentary meeting of the House of Commons this week marks the beginning of a new era in UK politics, after 14-years of governance by the Conservative Party. 

Labour gained its second-largest majority after 1997, securing 412 seats. The Conservative Party, under Prime Minister Rishi Sunak, faced a substantial defeat, winning only 121 seats. The Liberal Democrats achieved a notable increase with 72 (from just 8) seats, while the Scottish National Party (SNP) experienced a dramatic decline, securing only 9 seats. The Reform Party, co-founded by Nigel Farage, managed to win 5 seats, followed by the Green Party with 4 seats. 

Economic concerns, particularly the cost of living crisis and inflation, which peaked at 11.1% in 2022, dominated the voter agenda. Public services, especially the National Health Service (NHS), suffering from chronic underfunding and staff shortages due to a decade of fiscal austerity, were also among the top priorities. 

On Friday, Rishi Sunak resigned as Prime Minister. Subsequently, Keir Starmer was appointed Prime Minister, naming his new 25-member Cabinet which features Rachel Reeves as the UK’s first female chancellor, David Lammy as the foreign secretary and Yvette Cooper as the home secretary. 

Economic stability remains a top priority for the new government. Although the UK economy has shown signs of recovery, growth remains fragile.  The UK economy pulled out of recession in early 2024, with GDP expanding by 0.7% from the previous quarter, surpassing initial estimates. However, despite a solid start to 2024, with the fastest growth since late 2021, the longer-term outlook remains weak. The Bank of England estimates GDP will grow by 0.5% in Q2 2024, but underlying expansion rates are expected to float around 0.25% per quarter. Total foreign direct investment has also fallen for five of the last six quarters. 

While pledging not to increase corporation tax, VAT, or national insurance to show fiscal responsibility, Labour plans to raise £8.6bn through targeted tax increases, including a higher levy on private equity. Keir Starmer has pledged to ensure Britain achieves the highest sustained growth in the G7 with reforms such as easing planning controls to expedite infrastructure projects and building 1.5 million new homes. 

Last Thursday’s election outcome also has implications for the EU. Keir Starmer's government is expected to take a more cooperative stance with the EU, compared with the previous administration's approach.  

Tuesday, 9 July – Inaugural test flight of the European Space Agency’s newest rocket, the Ariane6 

On Tuesday,  the European Space Agency (ESA) and Arianespace will proceed with the inaugural launch of the Ariane 6 rocket.  Originally planned for debut in 2020, the Ariane 6 launch has faced numerous delays due to development issues with both the first and second stage engines. The 62-meter-tall rocket will lift off from Europe’s Spaceport in French Guiana, approximately 4 km from the former Ariane 5 launch pad. This will be the first of two planned launches for the rocket in 2024. 

The launch site is managed by France’s space agency, CNES (Centre National d’Etudes Spatiales). The ESA member states decided in 2014 to launch Ariane 6, with the participation of over 600 companies, with Arianespace (a joint venture between Airbus and Safran) serving as the prime contractor. Once operational, Arianespace will manage its commercial use, beginning with the second launch whereas ESA will continue to provide requirements for government missions, such as future launches of the Galileo navigation satellites.  

Its overall aim is to enhance Europe's competitiveness and autonomy in space exploration and to counter the growing competition in the commercial launch market, including the US private launch provider SpaceX. Notably, Ariane 6 has secured 42 guaranteed launches with subsidies in place, signifying financial backing and commercial agreements. The rocket has garnered major contracts, including an agreement with Amazon for 18 missions to launch satellites for its Project Kuiper broadband constellation.  Hence, the successful launch of Ariane 6 is deemed crucial for Europe's space ambitions and maintaining a competitive position in the global launch market and will also serve the bloc’s quest for greater strategic autonomy in crucial sectors. 

Nevertheless, Ariane 6 enters a launch market dominated by SpaceX, which has already completed 67 launches in 2024 with its Falcon 9 rocket and one with its Falcon Heavy. The pressing competition was highlighted last week when the European Organisation for the Exploitation of Meteorological Satellites (EUMETSAT) announced it would use SpaceX instead of waiting for Ariane 6 to launch its MTG-S1 satellite. Despite the setbacks, Arianespace plans to launch the Ariane 6 between nine and twelve times per year once certified. The second flight is scheduled for later in 2024, most likely in December, with six launches planned for 2025 and eight in 2027. 

Thursday, 11 July – CJEU to rule on data protection case involving Meta 

On Thursday, the Court of Justice of the EU (CJEU), the EU’s highest court, is set to issue a decision in Case C-757/22, involving Meta Platforms and the Federal Union of German Consumer Organisations (vzbv). The case centres on the legality of Meta's practices in its App Centre, where users in Germany were required to accept third-party gaming apps' terms and conditions, including permissions for these apps to post on their behalf on Facebook. 

The dispute began when vzbv filed a representative action under Article 80(2) of the General Data Protection Regulation (GDPR) at the Regional Court in Berlin, claiming Meta violated consumer protection laws by compelling users to consent to data practices without valid consent. After winning the case at the regional level, Meta appealed to the Higher Regional Court, Berlin, and subsequently to the Federal Court of Justice (BGH). The BGH then referred questions to the CJEU for clarification, particularly whether a breach of information obligations under Chapter 3 of the GDPR falls within the scope of Article 80(2) GDPR, which allows for representative actions. 

In an Opinion delivered in January, Advocate General Jean Richard de la Tour opined that associations could indeed bring representative actions under Article 80(2) GDPR if the breach of information obligations results in unlawful data processing. He also argued that the duty to provide information under Articles 12 and following the GDPR is fundamental to the lawfulness of data processing under Article 6 GDPR, especially when consent is the legal basis for processing.  His Opinion suggests that while not every breach of the duty to provide information can be challenged under Article 80(2) GDPR, breaches that directly lead to unlawful data processing due to invalid consent can. Although the Advocate General’s ruling is not binding the Court tends to follow their recommendations. This interpretation could significantly impact how consumer protection organisations address GDPR violations, particularly concerning consent-based data processing. 

In other words, this week’s decision will clarify whether breaches of information duties alone can trigger representative actions and will set a precedent for future data protection and consumer rights enforcement in the EU. 

Friday, 12 July – Deadline for Temu and Shein to respond to the Commission’s latest request for information under the DSA 

Last week, the EU stepped up its scrutiny of Chinese e-commerce platforms Temu and Shein by asking them to provide detailed information by 12 July regarding their compliance with the Digital Services Act (DSA) and its content moderation and consumer protection requirements.  This request for information (RFI) is a preliminary step that could lead to an official investigation under the DSA.   

On 31 May, Temu became the latest app to be designated as a ‘’very large online platform’’ (VLOP) under the DSA, following a complaint by the European Consumer Organisation (BEUC) and 18 of its national members, after recently hitting 75 million users in the bloc, exceeding the DSA threshold of 45 million users for platforms designated as VLOPs. Shein, another Chinese e-commerce platform, was designated as a VLOP in April.  The VLOP designation subjects both firms to stricter rules, including enhanced transparency and accountability measures to mitigate systemic risks. The Commission's ongoing enquiry focuses on several key areas, including content moderation, design practices, protection of minors, third-party sellers, and recommendation algorithms. 

Overall, the DSA, which entered into force in August 2023, aims to force tech companies to increase advertising transparency, take more responsibility for illegal content on their platforms, including any content promoting terrorist organisations, and improve data access.  The Commission has so far launched probes into Meta, TikTok, AliExpress, and X to assess their compliance with the new rules. These ongoing probes could result in fines of up to 6% of the global revenue of the designated VLOPs.