EU's Banks Take `Quantum Leap’ to Save the Planet: Brussels Edition

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

The biggest multilateral financial institution in the world will end funding for fossil fuel projects, including natural gas. Yes, you heard that right. This is a “quantum leap in its ambition,” European Investment Bank President Werner Hoyer said after the historic decision, which is expected to go a long way in supporting Europe’s plans to become the first climate-neutral continent. Meanwhile, the European Central Bank is considering adding climate-related risks to its stress-test scenarios, its Vice President Luis de Guindos said. As politicians across the world fight over transition to lower-carbon growth models, EU bankers are looking to lead the way. 

What’s Happening

New Commission | Ursula von der Leyen got a little closer to taking office on Dec. 1 after the European Parliament approved two of her three remaining commissioner nominees. Emmanuel Macron’s pick made it through, saving him from another embarrassment. But Hungary’s new candidate now has to answer follow-up questions ahead of a final vote to approve the new team. Meanwhile, the Commission threatened a lawsuit against the U.K. over its failure to name its own candidate.

Chasing Steel Mills | Italy’s premier is scrambling for a solution to an industrial crisis that’s dominated front pages for weeks while providing fodder for the opposition. Here’s why the fate of a bankrupt steel mill in the southern city of Taranto has become a life-or-death dilemma for Italy’s fragile coalition government. 

Polish Rule | Poland’s premier set conditions under which he will respect next week’s ruling of the EU’s highest tribunal about the government’s judicial reforms, saying the verdict must conform with the bloc’s treaties as well as Poland’s constitution. In a ruling set for Nov. 19, the EU’s top court will decide whether a new disciplinary chamber of Poland’s Supreme Court is sufficiently autonomous. 

Budget Talks | Money will be front and center next week, starting on Tuesday when ministers continue a highly contentious debate over how EU funds should be distributed over the next seven years. Later in the week, national budget plans will be in the spotlight when the Commission publishes its opinions on whether they risk breaking EU rules. 

In Case You Missed It

ECB Queen | Christine Lagarde sought to reset relations at her first meeting as ECB president, inviting her Governing Council to a team-building session at a castle. The gathering followed an unprecedented rift over recent policy decisions, raising questions over the institution’s future capacity to act. Two of these policy makers signaled the central bank is in no rush to further expand monetary stimulus and urged a deeper rethink of their strategy.

Banking Union | Progress toward a European banking union is gaining momentum, and a deal in principle could be possible by December, German Finance Minister Olaf Scholz said at a Bloomberg event in Berlin. A word of caution from us though: a political agreement in December would only mark the start of what would probably be years of fraught negotiations until a proper system is in place.

Farage Hurdle | Nigel Farage said he will fight all Labour-held seats, despite calls to stand his Brexit Party candidates down and clear the path for Boris Johnson to win a majority and deliver Brexit. The decision makes it more difficult for the British prime minister to win seats from Labour to secure a majority in Parliament for the Conservatives. Here’s the vote’s battlegrounds.

Leftist Fears | Spain’s Podemos was born from the rage against austerity. Now the party is on the brink of taking power as part of a Socialist-led coalition, and investors are worried. Here’s who should be afraid.

Chart of the Day

Germany narrowly dodged what would have been its first recession in six years, putting a damper on speculation that the government will add fiscal stimulus any time soon. The surprise expansion doesn’t change the fact that the economy is going through a torrid period. Expansion was just 0.1% in the third quarter, with the 19-country currency bloc only a little better at 0.2%.

Today’s Agenda

All times CET.

• 10 a.m. EU finance ministry officials meet in Brussels to prepare negotiations with the European Parliament on the general budget for 2020
• 11 a.m. Eurostat to release September data on international trade in goods and final inflation reading for October
• Commission Vice President Valdis Dombrovskis speaks in London at an Economist Intelligence roundtable discussion with London’s mayor and Latvia’s prime minister
• ECB Executive Board member Yves Mersch speaks at a conference on international cooperation between banking supervisors
• ECB Governing Council member Carlos Costa, former chief economist Peter Praet, and former president Jean-Claude Trichet speak at a conference on the euro

--With assistance from Zoe Schneeweiss and Ewa Krukowska.

To contact the editor responsible for this story: Benedikt Kammel at bkammel@bloomberg.net, Chris Reiter

©2019 Bloomberg L.P.