Brussels Edition: The only choice

Brussels Edition
Bloomberg

Welcome to the Brussels Edition, Bloomberg's daily briefing on what matters most in the heart of the European Union.

The clouds may finally be clearing for ECB President Christine Lagarde after a tumultuous few months in which it looked like the very existence of the euro area might be at stake. Markets have calmed and the EU has given the clearest sign yet it's willing to do whatever is necessary to avert another sovereign crisis. But with the continent facing the steepest recession since World War II, she can't let up, and is widely expected today to announce another 500 billion-euro boost to the central bank's emergency stimulus program. If she doesn't, market stresses may resurface as investors start to fear the EU will fail to adequately tackle the crisis ⁠— especially as leaders still have to reach full agreement on their recovery fund.

⁠—John Ainger

What's Happening

Merkel's Moment | German Chancellor Angela Merkel's ruling coalition agreed overnight on a sweeping 130 billion-euro stimulus to spur consumer spending and get businesses investing again, exceeding the top end of expectations by 30%. The package includes a temporary reduction in sales tax, and cash to build out 5G data networks, improve railways and double incentives for electric vehicles.

Slashing Tariffs | The EU wants to abolish tariffs and duties on critical medicines and equipment, in an effort to guard against the kind of supply-chain shock triggered by the coronavirus pandemic. The bloc's trade chiefs will debate forging a global coalition of the willing next week, and we have the details of the plan.

Vaccine Race | The EU is set to join the global race for early and preferential access to a coronavirus vaccine, if and when one is found. How? It will chip in for the development costs for pharmaceuticals.

Easing Restrictions | With the virus largely under control, borders are creaking open across Europe. Austria is removing controls on all neighbors with the exception of Italy from today, while Germany approved plans that pave the way for a global travel warning to be lifted for European countries from June 15. Here's the latest.

Brexit Boost | With U.K.-EU talks stuck in the mud, ever more Brits are taking steps to ensure they retain their rights on the continent. A record number took German nationality last year, helping to lift the total number of new citizens to the highest since 2003.

In Case You Missed It

French Pique | France slammed the U.S. over its probe into digital taxes being considered by a number of countries, saying it contradicts Washington's call for unity among leading economies. The two nations agreed a truce this year in a dispute over France's digital services tax, under which Washington is holding back on sanctions and Paris is suspending the collection of its levy while agreement is sought on new global tax rules.

Italy's Revival | Prime Minister Giuseppe Conte set out an ambitious strategy to rescue Italy's paralyzed economy and win over European partners to help fund it. But it's not clear even the current aid package is doing what it's supposed to in order to help struggling Italians.

Swedish Mistake | It was the nation that bucked the strict lockdown strategy adopted by nearly all others in Europe, and now Sweden's top epidemiologist has admitted his approach resulted in too many deaths. Here's what he had to say.

Cut Emissions | The EU told automakers to significantly cut emissions after a new report showed carbon-dioxide pollution from cars actually increased, and is more than quarter higher than the fleet-wide target of 95 grams per kilometer taking effect from this year. That will have to change if the bloc wants to meet its goal of becoming climate neutral by 2050.

Poland Vote | Poland's delayed Presidential election has been given the go-ahead for June 28. It marks a key test for the country's democracy, with the ruling Law & Justice party consolidating its grip on power over the past five years. Its handling of the coronavirus has also been questioned.

Chart of the Day

Bloomberg Economics estimates that 10% of Europe's labor supply could be unlocked as schools and nurseries reopen. Whether that translates into a 10% boost to economic activity will depend on whether parents feel it's safe to send their children back to school and they have jobs to return to.

Today's Agenda

All times CET.

  • 11 a.m. Eurostat to publish April retail trade reading
  • 1:45 p.m. ECB delivers decision on interest rates, followed by Lagarde's press conference at 2:30 p.m.
  • Commission President von der Leyen addresses the Global Vaccine Summit hosted by the U.K.
  • Video conference of EU Justice ministers
  • Video conference of EU transport ministers
  • The EU's top court gives a non-binding opinion in an appeal by Lundbeck against a 93.8 million-euros antitrust fine for so-called pay-for-delay deals that held back sales of cheaper generic versions of its antidepressant citalopram
  • EU's financial services chief Dombrovskis participates in the Town Hall meeting of the American Chamber of Commerce to the EU via videoconference
  • EU economy chief Gentiloni participates in a virtual event at the Peterson Institute for International Economics and an online discussion with Yasutoshi Nishimura, Minister of State for Economic and Fiscal Policy of Japan, as part of the World Economic Forum
  • The EU's top court gives a binding ruling in a challenge by Hungary against an EU decision to stall the government's progressive taxes on retailers and tobacco companies

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