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Brussels Edition: Pushed Across the Rubicon

Brussels Edition: Pushed Across the Rubicon

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

The viral outbreak has pushed Europe across the Rubicon. The EU shut its external borders, while members erect internal checkpoints. New curfews, lockdowns and more drastic restrictions are announced every day. Budget rules will be ditched, and Angela Merkel flirted with crossing the ultimate German red line by not ruling out joint debt issuance. These steps eclipse the measures adopted almost a decade ago at the peak of the debt crisis. Back then, the existential threat forced Europe to deepen its integration. The jury is still out on how far and toward which direction the new threat will take the bloc this time.

What’s Happening

Goods Flow | With thousands of trucks stuck between Europe’s closing borders, EU transport ministers will hold an informal conference call this morning aimed at unblocking the situation. While the virus has already killed the free movement of people, the bloc can’t afford losing the free flow of goods.

Peaceful Warships | EU government envoys in Brussels will today seek agreement on launching a naval mission to patrol an arms embargo in war-torn Libya. The aim is for foreign ministers to sign off next week for what will be called “Operation Irene,” the Greek word for “peace.”

EU Enlargement | EU ambassadors will also seek agreement on a statement paving the way for the start of accession negotiations with Albania and North Macedonia. The wording of the communique — due to be rubber-stamped by ministers next week — invites the Commission to come up with a negotiating framework for the talks by June.

Brexit Delays | Today’s videoconference between the U.K. and the EU over their post-Brexit relationship will be postponed because of the coronavirus and may resume later in the week. The delay, which narrows the already limited time window for negotiations, will add to the growing pressure on Prime Minister Boris Johnson to put off Britain’s final break with the bloc. 

In Case You Missed It

Global Response | As the coronavirus spreads across the globe, schools and universities are being closed; lockdowns have become commonplace; non-essential businesses are shut; and companies are asking employees to work from home, while $1.14 trillion in fiscal support has been pledged or is under consideration by governments around the world. Here’s a country-by-country list of all the actions taken.

State Support | The EU is loosening its curbs on state handouts, allowing cash injections and other government support to thousands of companies hit by a virus-induced recession. In guidelines due to be adopted this week, the Commission said government budgets must stand in the front line to offer “swift and effective action.”

Bank Aid | Relief is on the way for banks in France, Italy and Germany, as the countries resort to crisis-era tools to limit the damage from the coronavirus. The moves come as Europe’s largest economies seek to avert bailouts of the still-feeble banking sector by guaranteeing that lenders won’t be on the hook for a surge in soured loans.

Back in Business | The Dutch government’s order to shut down bars and restaurants due to the coronavirus included the country’s famous “coffee shops,” a move that quickly had dealers handing out business cards and selling pot illegally. To prevent the upsurge in street crime as the business shifted underground, pot stores can now reopen — as long as customers maintain a healthy distance.

Chart of the Day

Brussels Edition: Pushed Across the Rubicon

European markets have been in turmoil as investors try to gauge the impact of the outbreak — and they weren’t helped by Christine Lagarde’s botched intervention on Thursday. While Italian yields have surged this month, with 10-year rates more than doubling to around 2.4%, they remain well short of the almost 7.5% euro-era record seen during the debt crisis. German yields have also rebounded from record-lows as investors ready for more spending, but 10-year rates are still negative. Spain’s 10-year yields have increased by 77 basis points this month to 1.05%, the highest in almost a year.

Today’s Agenda

All times CET.

  • 9 a.m. EU ambassadors to seek agreement on naval mission to patrol Libyan arms embargo, make progress in accession talks with Albania and North Macedonia
  • 11 a.m. EU transport ministers hold call on coronavirus impact on cross-border transport
  • 4 p.m. Extraordinary videoconference of EU health and home affairs ministers

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