Brussels Edition: Breaking the deadlock

Brussels Edition
Bloomberg

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

After three long days and as many sleepless nights, EU leaders have yet to reach a deal on a jointly-financed recovery plan to cushion the blow from the steepest recession in living memory. They'll reconvene at 4 p.m. in Brussels with the hope of finally agreeing to the latest iteration of the proposal that includes 390 billion euros in grants for member states hit by the crisis. The compromise on the table is now less ambitious than the original proposal by France, Germany and the European Commission. Despite pressure from 22 member states, a small group of rich nations led by the Netherlands refused to commit to a level of joint borrowing that would mark a giant leap in the European unification process. Markets will be disappointed, especially if talks today fail, just as sporadic surges of the pandemic exacerbate fears of a second wave.

— Viktoria Dendrinou and Nikos Chrysoloras

What's Happening

Tough Talking | A month of barely any progress during informal contact between the EU and U.K. has eroded the optimism that had crept into the two sides' talks over their future relationship. The first formal round of negotiations since early June begins in London today, with European officials expressing confusion over why Britain hasn't signaled willingness to compromise.

Virus Update | Russia's ambassador to the U.K. rejected allegations that hackers linked to the country's intelligence services targeted British vaccine research; Amsterdam added restrictions after the city's red-light district became too crowded and much-anticipated results of phase 1 tests for one of the leading vaccine candidates will be published in The Lancet  today. Here's the latest.

Jobless Recovery | With job cuts mounting and costly furlough programs that can't last forever, Europe is at risk of a devastating increase in unemployment that won't be easy to reverse. That raises the prospect of a job-poor — or even jobless — recovery, where unemployment stays high for a prolonged period even as growth appears to pick up.

Wirecard Questions | The German parliament's finance committee will meet for a special session today to question Deputy Finance Minister Joerg Kukies on his role in the Wirecard scandal. The hearing follows revelations that Finance Minister Olaf Scholz already knew about suspicions at Wirecard in February 2019.

In Case You Missed It

Down, Not Out | The EU's two surprise court losses in cases related to its handling of tech companies are unlikely to slow its multi-front attempts to regulate U.S. digital giants. Margrethe Vestager announced an antitrust probe into voice assistants such as Siri and Alexa, vowing to continue her quest to force fair behavior.

Debt Relief | G-20 nations will decide on extending the current suspension of debt repayments by the poorest countries closer to the end of the year, putting off assurances of additional debt relief. The group expects the standstill to make $14 billion available to confront the virus.

Polish Greening | The EU's most coal-reliant country has a controversial new strategy for its 400 billion-euro green push: bulk up the Polish state oil company and let it lead the transformation. But plans to create a domestic energy champion may run into  growing European reluctance to invest in companies selling fossil fuels.

School Studies | Scientists in a Nordic study have found that keeping primary schools open during the coronavirus pandemic may not have had much bearing on contagion rates. While it's not the first time researchers have raised questions about the merits of shutting schools, some countries have had dangerous outcomes.

Chart of the Day

The coronavirus pandemic has increased the need to work or study remotely and that's bad news for youngsters in Italy, where less than two-thirds of 16- to 24-year-olds have "basic" or "above basic" digital-literacy skills. Croatia, Estonia and The Netherlands lead the rest of the EU with rates above 90%, according to Eurostat data for last year. The lingering fear of a second virus outbreak is likely to exacerbate these inequalities.

Today's Agenda

All times CET.

  • 4 p.m. EU leaders reconvene in Brussels to push for a recovery-fund deal
  • New round of Brexit negotiations begins in London  
  • EU agriculture ministers meet in Brussels to discuss farm-to-fork strategy and reform of common agricultural policy
  • Serbian President Aleksandar Vucic is holding the final rounds of talks with the biggest political groups that made it to parliament, before deciding whether to go for a coalition government

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