CWA # 2165
The World This Quarter
Europe (April-June 2026)
End of the Orban Era, Political Fragmentation, Tightening of Migration Rules and Continuing Economic Slowdown
Europe saw increased challenges for incumbent governments. While there is a shift away from long-standing populist strongholds in Hungary, far-right gains continued in Germany. Overall, there was a persistent political instability in Western Europe.
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Himani Pant
30 June 2026
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In the second quarter of 2026, Europe continued to grapple with internal and external challenges amid ongoing global geopolitical shifts.
Following are major developments in Europe.
1. End of the Orbán Era:
Hungary’s Parliamentary election on 12 April 2026 marked a significant turning point. Viktor Orbán, who had held power for 16 years, lost his position to his former supporter Péter Magyar. Magyar’s Tisza Party secured approximately 138 seats, while the Fidesz–KDNP alliance won 55 of the 199 seats in the Hungarian National Assembly. This shift signalled a major political change in Hungary and was widely seen as a turning point for Central European politics and EU cohesion. Following Magyar’s victory, there was anticipation of a potential easing of Hungary’s frequent vetoes on EU decisions, particularly those concerning Ukraine aid, rule of law reforms, and other matters. This suggested Hungary’s potential reset with the EU. However, the extent of transformation remains uncertain. Magyar’s positions on migration, sovereignty, and national identity indicate continuity on key ideological fronts. Additionally, despite securing a Parliamentary majority, dismantling entrenched systems will likely be gradual, making immediate structural transformation unlikely.
2. Growth of Political Fragmentation and Anti-Establishment Forces:
Europe also witnessed growing political fragmentation and the rise of right-wing populism. The pressures on British Prime Minister Keir Starmer’s Labour government reached a breaking point, culminating in his resignation on 22 June. The political pressure stemmed from disastrous local election results for the Labour Party in May, sluggish economic growth, and the resignation of several key ministers.
Meanwhile, in Germany, the rise of the far-right Alternative for Germany (AfD) continued to grow, raising expectations that AfD could potentially lead a state government later in 2026. This development comes amid mounting pressure on the incumbent government, which faces challenges arising from economic stagnation, ageing populations, and other issues. AfD’s rise reflects broader European trends of populist and right-wing gains, driven by migration, economic pressures, among other factors. Overall, the second quarter of 2026 highlighted growing voter dissatisfaction with incumbents and the appeal of anti-establishment forces (both left or right) in different European countries.
3. Tightening Migration Rules:
The European Union’s Pact on Migration and Asylum officially entered into application on 12 June 2026. This marked the transition from a political agreement into binding operational reality across all member states, following an extensive two-year preparation phase led by the European Commission. The pact was proposed by the European Commission in September 2020, politically agreed in December 2023, adopted in 2024, and finally entered into application on 12 June 2026. The Pact aims to ease the burden on frontline arrival states, particularly those at Europe’s margins. However, progress has been uneven. Concerns include prolonged detention, including for families and children, rushed procedures that could undermine fair asylum assessments, risks of refoulement, externalisation of responsibility and potential rights violations in crisis situations.
4. Continued Economic Slowdown and the drive for de-risking initiatives:
The economic slowdown persisted in the second quarter. European economic trends showed a slightly contracting economy amid geopolitical tensions, particularly the US-Iran conflict impacting energy and causing higher inflation pressures that eased slightly only in June when the reports on US-Iran peace deal gained momentum.
In response to inflation risks stemming from energy and disruptions in the Strait of Hormuz, the European Central Bank raised its benchmark interest rates by 25 basis points on 11 June 2026, the first such hike since 2023.
Europe's de-risking efforts, primarily aimed at reducing strategic dependencies on China in critical supply chains, technologies, and raw materials, while evading full decoupling, continued amid ongoing geopolitical turmoil, internal economic pressures, and slow implementation progress. In June 2026, the European Commission announced plans for a new diversification law to require or incentivise EU companies to diversify sources of key supplies such as raw materials, batteries, chips, solar, chemicals, metals, and clean energy technology.
5. Push for strengthened European Security Strategy:
Emphasis on European strategic autonomy, including increased defence spending persisted in the second quarter. Amid rising uncertainties of US policies, Europe’s endeavours to boost defence capabilities while reducing external dependencies continued. Amid rising US policy uncertainties, preparations were underway for the next NATO Summit in Ankara in July to highlight a more European NATO.
To conclude: Europe in the second quarter (April-June 2026)
In the second quarter of 2026, Europe saw increased challenges for incumbent governments. While there is a shift away from long-standing populist strongholds in Hungary, far-right gains continued in Germany. Overall, there was a persistent political instability in key Western European countries. Europe continued to grapple with US policy uncertainty, energy pressures from the US-Iran conflict, and internal political strains.
About the author
Dr Himani Pant is a Research Fellow at the Indian Council of World Affairs (ICWA), New Delhi
