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Brussels Edition: Something's got to give

Brussels Edition
Bloomberg

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

EU chief Brexit negotiator Michel Barnier, who has been in isolation since last week after a member of his team tested positive for the coronavirus, is due today to brief fisheries ministers and diplomats after another week of talks with the U.K. produced little in the way of results. The two teams have been able to hold discussions only virtually since last weekend which, officials say, has hampered progress toward a trade deal. Barnier's team is expected to travel to London tonight — although this has yet to be confirmed — to resume face-to-face talks over the weekend. The two sides are still far apart on the long outstanding issues and both sets of negotiators know that something has to give within the next few days.

John Ainger and Ian Wishart

What's Happening

Brexit Stockpiling | And with talks between the two sides still deadlocked, a shortage of warehouse space because of the pandemic and Christmas demand is putting the U.K. at risk of shortages of some popular food products. Mayonnaise and Kit-Kats anyone?

Deadlocked Stimulus | After Poland and Hungary doubled down on their threat to veto the EU's budget and jointly financed stimulus, government envoys in Brussels will today seek a solution to the impasse. At this stage, there are three possibilities: a compromise proposal that miraculously allows a face-saving climb down, a surprise somersault by Poland and Hungary, or — more likely — an escalation of the quarrel with unpredictable consequences. 

Wooing Biden | France and Germany are leading efforts in Europe to make early contact with U.S. President-elect Joe Biden's team to repair relations between the U.S. and the EU. Paris wants to resolve an aircraft dispute that has seen tariffs imposed on more than 10 billion-euros of transatlantic goods, while Berlin is keen to revive free-trade talks. A "mini-deal" has been made already though — on cigarette lighters among other things.

Debt Wipe | An aide to Italy's Prime Minister Giuseppe Conte has come up with a novel and controversial idea for the portion of its debt bought by the European Central Bank during the pandemic to be either written off or held by the institution forever. It would add another element to the debate surrounding Modern Monetary Theory.

Record Jump | German Chancellor Angela Merkel called on Europe's ski resorts to close this winter as the nation registered a record increase in new coronavirus cases, which have now surpassed 1 million. This week the government extended a partial shutdown designed to check the spread of the disease. Here's the latest

In Case You Missed It

Repeat Test | AstraZeneca CEO Pascal Soriot said the drugmaker will likely conduct an additional global trial to assess the efficacy of its Covid-19 vaccine after current studies raised questions over its level of protection. Here's what happened.

German Debt | The coronavirus this year forced Germany into something it had long been reluctant to do: loosen the purse strings. And it's not yet time to tighten them back up. Federal borrowing could rise to around 180 billion euros, almost double what was originally planned.

Losing Faith | Swedes are losing confidence in their government's unique approach to fighting the coronavirus, with concerns over capacity in the health-care system now almost universal. A poll showed that 82% of Swedes are either "somewhat" or "very worried" as to whether it can meet the challenge. The nation's life expectancy is set to drop for the first time in a century.

Expat Snub | London, Paris and Hong Kong have long been favored destinations for global expats, but they are losing their allure due to concerns over health care, safety, work-life balance, and the affordability of housing. Where should you go instead?

Turkey Troubles | Greece called on its European partners to set clear limits on what actions they will tolerate from Turkey in the increasingly tense eastern Mediterranean. It expects leaders to make clear that the bloc agrees that Turkish actions in the region are damaging, calling Ankara's policies "delinquent and provocative."

Chart of the Day

The resurgence of the coronavirus pandemic and renewed lockdowns have torpedoed the mood among households in the euro area's two largest economies. French consumer confidence sank to the lowest in two years  worse even than during the first wave of the pandemic  as households worried more about their finances, the job market and living standards. In Germany, the Gfk sentiment measure dropped to its weakest since July, with income worries rising.

Today's Agenda

All times CET.

  • 10:15 a.m EU financial services chief Mairead McGuinness discusses the "Future of Payments in Europe" at a virtual conference organized by the Deutsche Bundesbank
  • 12 p.m. EU Commissioner Didier Reynders speaks on monitoring the rule of law at CEPS event
  • 12 p.m. EC Press conference by Vice-President Margaritis Schinas, Vice-President of the Parliament Roberta Metsola, and religious leaders following their annual high-level meeting
  • Video conference of EU's research ministers

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