The European Parliament's election results are in and the race to determine what it all means for Europe's future is just beginning. At stake is the ability to lead and set the agenda for all of the EU's top policy issues for the next five years. 

Leadership of the EU's financial and economic affairs is perhaps the biggest prize in this entire contest. 

Most of the media attention will focus on who gets the nomination to replace Jean-Claude Juncker as the next President of the European Commission. But the trade-offs EU countries will make to get there will have knock-on effects in a much larger influence game. 

To keep it simple, there are at least three decisive EU leadership roles in economic and financial affairs that are currently in the mix: 

  • President of the European Central Bank: with Mario Draghi's term ending this year and Germany pushing to replace him with Bundesbank Preisdent Jens Weidmann 
  • Chair of the Parliament's Economic and Monetary Affairs Committee: a supremely influential financial legislator. The word is that Spanish Liberals are positioning LSE and UChicago economics professor Luis Garicano to take the reins
  • European Commissioner for Financial Services: who gets to set the Commission's agenda for banking, capital markets, insurance, fintech, green finance (and more) reforms over the next five years

The most important trade-off everyone is talking about is between the Commission Presidency and who will become the next ECB chief. In short, many countries see those two roles as equally attractive but it would be unthinkable for a single country or region to get both. Mario Draghi's retirement this year means that 2019 will see his replacement and the new Commission President appointed at virtually the same time (this perfect alignment of cycles is only meant to happen once every 40 years!).  

France and Germany are already positioning serious candidates for both the ECB and Commission jobs, but they know a difficult deal will have to be made soon. The fragility of the Eurozone's economic recovery since the crisis and the enduring controversy around the ECB's ultra-loose monetary policy stance mean that this trade-off is no small matter. 

Another big takeaway from this weekend's election results is the fact that the two big EU political families (the centre-right EPP and the Socialists) no longer control a majority in the European Parliament for the first time ever. The EU's centrist group (Liberals + Macron's En Marche!), however, did very well in the vote and grew substantially. If they enter a governing coalition with the two bigger groups (which is looking likely), they will demand a hefty share of top jobs and influence over the EU's economic and financial policies. 

Liberals are often seen as the most pro-EU forces in Brussels. So watch out for policy signals from them over the coming months favouring further financial markets integration, stronger EU financial authorities and more EU action on new(ish) policy areas like the digitalisation of financial services. 

The coming weeks and months of manoeuvres and trade-offs will see a lot of new policy ideas publicly tested, and a lot of backroom deals quietly made. 

The next five years of EU financial services regulation and economic policy is at stake, and we're just getting started...