Good morning from Brussels, 

After 14 years in opposition, the Labour party is expected to triumph in the UK elections on Thursday as latest polls suggest they have a safe 20 point lead. 

As British are leaning to the left, Brussels is still shaken by voters’ right turn in the recent EU election and remain cautious about the second round of the French elections this weekend.  

But they also keep an eye on the next day in London, eight years since Brexit.

In economy, re-joining the EU or the single market is ruled out. But Brussels-based analysts estimate that a Labour’s victory will help restore trust with Europe – a useful perquisite which might help resolve more technical trade-related disputes. 

When it comes to regulatory alignment, something the EU industry pushes for, UK’s “cherry-picking” approach will hardly be accepted by Brussels. 

But some estimate that escalating geopolitical tensions between the US, the EU, and China in the coming years may mount the pressure on the new UK government to seek closer economic ties with the EU. 

Thomas Moller-Nielsen has the whole story.

Politically, the Labour will seek closer collaboration with the EU on migration. This may be a problem for the Labour, as they have vowed to scrap the Conservatives-inspired “Rwanda scheme”, while the rising right-wing politicians in Europe want to adopt it.   

Alice Taylor and Catherine Feore have the details.

The Labour will also seek a new security pact with Europe. On this matter, the Europeans have their own headaches as NATO diplomats told Euractiv they were seriously concerned about the risks of the far-right entering government in France.

The three EU Parliament groups of the centrist majority diverge on some key policy issues for the next mandate, according to draft action plans seen by Euractiv, the basis for their talks with Ursula von der Leyen as she seeks support to win a second mandate as Commission president. Read more.

Meanwhile, EU socialists are set to double down on their calls for social guarantees and solid public support to tackle ongoing economic challenges, proposing in their draft action plan a batch of additional revenue streams for the bloc’s funding resources. Anna Brunetti has the story.

Last but not least, the EU farmers’ position in the food supply chain will be a top priority for the new EU coalition.

PARIS

NATO members are increasingly concerned about the risks to the cohesion of the Western military alliance posed by the possible entry of the French far-right into government and whether Paris’ influence and commitment to Ukraine could wane in the near future. Read more.

Russia targets social media during French legislative campaign. Russian disinformation campaigns are targeting social media platforms to destabilise the French political scene – currently in a legislative campaign – a study by the French National Centre for Scientific Research (CNRS) focused exclusively on X reads. Read more.

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BERLIN

German coalition needs ‘painful’ compromises as it misses first 2025 budget deadline.Germany’s three-party government coalition did not reach an internal deal on the 2025 draft budget by Wednesday, the previously agreed deadline, as differences over potential spending cuts proved challenging to bridge. Read more.

New EU left group fails, Wagenknecht blames ‘majority groups’. Talks to form an alternative left group in the European Parliament failed, Germany’s Alliance Sahra Wagenknecht (BSW) confirmed Wednesday 3 July, as its lead candidate Fabio de Masi blamed last-minute dropouts and the “powerful levers” of “majority groups”. Read more.

One day before application, German car lobby urges EU to drop tariffs against China. One day before the preliminary application of tariffs on electric cars from China, due on Thursday (4 July), Germany’s main car industry lobby VDA called on the EU to pull back on the tariffs, arguing that they will do more harm than good. Read more.

ROME

Uncertainty hovers over Italy’s M5S bid to join the EU Left. As Italy’s Five Star Movement (M5S) looks to Thursday’s decision on its membership of the European Parliament’s Left group, it remains to be seen whether its controversial past deals in a previous government with Matteo Salvini’s Lega will make the EU group look the other way. Read more.

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MADRID

Spain’s VOX denies blocking party of far-right ‘rising star’ from joining ECR. Spanish far-right party VOX has rejected claims from Luise “Alvise” Perez, viewed as the ‘rising star’ in Spain’s far-right scene, that his party SALF has been denied entry into the EU’s conservative ECR group. Read more.

Spain to crack down on holiday rentals to address housing crisis. Spain’s government announced a crackdown on Wednesday (3 July) on short-term and seasonal holiday lettings amid rising anger from locals who feel priced out of the housing market. Read more.

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LISBON | MADRID | PARIS

Iberian leaders agree to negotiate energy interconnections with France. Portugal and Spain have agreed to participate jointly in meetings with France on energy interconnections, arguing that the issue is a European one and not just one between the Iberian peninsula and France, the environment ministers announced on Wednesday. Read more.

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ATHENS

Greek centre-right politician sacked after attacking worker at airport. Greece’s former minister of agriculture Lefteris Avgenakis has been sacked from the ruling New Democracy party (EPP) after a video circulated on social media showed him attacking an airport worker in Athens. Read more.

PRAGUE

Czechia has been subjected to targeted information operations aimed at reducing support for Ukraine, a recent report by the Czech National Centre for Combating Organised Crime (NCOZ) has revealed. Read more.

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WARSAW

Poland scares Belarus with trade measures – media reports. Belarusian President Alexander Lukashenko has held close government meetings to discuss how to deal with the new in-depth checks on goods which Poland has introduced as a measure to slow down the flow of goods from Belarus, Polish media report. Read more.

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BRATISLAVA

EU funds for Slovakia at risk as penal reform’s contentious parts get constitutional OK. Slovakia’s Constitutional Court has ruled that most of the criticised changes to the country’s Criminal Code are constitutional and can be implemented, a decision that could potentially jeopardise Slovakia’s access to EU funds. Read more.

SOFIA

Borissov fails to form government, dimming chances of avoiding snap vote. Bulgaria’s parliament on Tuesday rejected the government proposed by the country’s largest party, plunging the EU’s poorest country into another political crisis and greatly diminishing the prospects of avoiding the seventh general election in just over three years. Read more.

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BUCHAREST

Russia declares a Romanian diplomat persona non grata. Russia declared a member of the Romanian embassy in Moscow persona non grata in response to Romania’s decision to do the same to a Russian diplomat at the end of May, Romania’s Foreign Ministry announced Wednesday. Read more.

• EU: High Representative of the Union for Foreign Affairs and Security Policy Josep Borrell addresses the European Council on Foreign Relations annual meeting, in Madrid, Spain;
• Economy Commissioner Paolo Gentiloni delivers keynote speech at Global Conference on Measuring New Forms of Employment, organised by Eurostat and International Labour Organization (ILO), in Brussels, Belgium;

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[Edited by Sarantis Michalopoulos, Daniel Eck, Alice Taylor]