Lula secures a fourth term and accelerates Brazil’s regulatory agenda

Representative André Janones’s “Exército do Lula”, a WhatsApp network reaching almost 11 million followers, connected digital campaigning with this mobilisation on the ground. Messages encouraged supporters to vote, mobilise personal networks and respond to emerging difficulties. National abstention fell from 21.08% to 19.22%, bringing approximately three million additional voters to the polls, while blank and invalid ballots also declined. Lula’s public recognition of Janones underlined a lesson likely to shape his next administration: direct digital communication had become essential to political mobilisation, even as his campaign challenged the power of the platforms carrying it.

At 80, Lula is entering what should be his final presidential term: the Constitution bars a third consecutive mandate. Flávio’s defeat also opens competition within the right. Re-elected São Paulo Governor Tarcísio de Freitas could offer broader coalition-building, while digitally influential figures may reshape succession on both sides. Janones exemplifies this on the left; on the right, Representative Nikolas Ferreira won approximately 3.12 million votes but will remain below the presidential age requirement for the 2030 election. His influence could support another candidate. The familiar Lula–Bolsonaro contest may be ending, although polarisation need not disappear with it.

A window for political agreements

Lula will govern alongside a more conservative, 513-member House of Representatives and 81-member Senate. Yet Brazil’s parliamentary coalitions remain fluid. The Centrão, a grouping of pragmatic centre and centre-right parties, can provide support through negotiations over policy, budgets and institutional influence. Congressional leaders seeking re-election to their positions have incentives to reach agreements with the president.

Timing matters. Lula’s new term begins on 5 January 2027, governors take office on 6 January, and representatives and senators on 1 February. Before then, Lula could seek agreements on platform regulation; the Public Security Constitutional Amendment, reorganising responsibilities and cooperation between federal and subnational authorities; and an appointment to the existing Supreme Court vacancy requiring Senate confirmation. A limited electoral reform could also enter negotiations, adjusting campaign, party or voting rules; its substance and constitutional deadlines would determine which future elections it could affect. Outgoing legislators’ reduced electoral exposure could ease difficult compromises before the more conservative Congress arrives.

International recognition and the relationship with Washington

Bolsonaro’s announcement that he would challenge the result adds political tension, but our assessment is that judicial reversal is highly unlikely. For business, congressional agreements and the government’s economic choices will be more consequential indicators of its capacity to deliver.

Washington’s response is a more consequential external uncertainty. Eduardo Bolsonaro, Flávio’s brother, remains in the United States under a Brazilian arrest warrant and has publicly sought US pressure on Brazilian authorities. His access to conservative networks, including figures close to Secretary of State Marco Rubio, warrants attention without implying control over US policy. Daniel Perez, Washington’s ambassador-designate, still requires Brazil’s agrément, or formal consent. The 3 November US midterms, particularly Senate outcomes, could alter political support, oversight and diplomatic appointments. Foreign non-recognition could amplify pressure, but would not itself invalidate Brazil’s election.

What businesses should prepare for

Campaign-period benefits and commitments increase pressure on the 2027 budget, potentially prompting income-tax changes or withdrawal of tax concessions. The dual value-added tax reform introduces the federal CBS more fully in 2027, while the state and municipal IBS follows a longer transition. Fiscal demands and exemptions may influence negotiations over the effective burden, but additional spending does not automatically raise VAT rates. Persistent financing needs could sustain high borrowing costs: the Focus survey published by the Brazilian Central Bank on 19 October put median year-end Selic expectations at 13.25% for 2026 and 12% for 2027, before the run-off result.

Technology and social media companies face a particularly significant shift. Lula’s victory speech promised platform regulation following campaign allegations of discriminatory restrictions, especially by Meta, which acknowledged technical failures while denying deliberate political bias. We assess a high likelihood that the government will seek to advance legislation before February, alongside heavier scrutiny throughout the next term. Advertising, algorithms, content moderation and artificial intelligence are likely to feature prominently.

Other changes already require operational preparation. Congress’s October decision to replace the six-days-on, one-day-off working pattern with two paid rest days and progressively shorter weekly hours will affect staffing, costs and collective bargaining. Betting restrictions remain subject to congressional negotiation, with implications extending to payments, advertising and sports sponsorship.

Financial expectations must also adjust. Investors anticipating a Bolsonaro victory face a different outlook for fiscal policy, interest rates and regulatory intervention. The medium-term business environment will depend on how Lula reconciles spending commitments with credible public finances. Companies should now connect political intelligence with investment planning, compliance and institutional engagement, particularly where decisions could be accelerated before February.