Brussels Edition: Sputtering Engine

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

Germany’s traditional economic motor is sputtering, and nowhere will that be more evident than at the Frankfurt auto show this week, where demonstrators will look to disrupt the traditional showcase as times get tougher. The country’s car production is slumping and not just because of trade tensions. Public concerns about global warming, tighter emissions regulations and changing consumer habits are choking off the internal combustion engine. The country’s brush with recession is weighing on the entire continent. It’s reaching a point where Germany — and Europe — need to adapt or stick their heads in the sand.

What’s Happening

Spending Pressure | Prodded by European peers, some German politicians are signaling their readiness to expand infrastructure and climate-related investment in an effort to stave off an ever-worsening economic slowdown, while helping the planet in the process. The question is, how bad will the economy have to get before they take action? 

Your Move, Mario | It’s a perennial problem in Europe: the countries that want to spend more money can’t; and the ones that can, won’t. So the onus of figuring a way out of the economic malaise falls again on “Super” Mario Draghi and the European Central Bank’s increasingly exasperated Governing Council, who are meeting this week. 

Italian Vote | Speaking of countries that should be tightening their belts, the new Italian government faces a confidence vote in the lower house of Parliament today. Giuseppe Conte is expected to secure the backing of lawmakers, after winning over international investors — keeping the populist threat at bay for now.

Dublin Dash | After a week that saw his Brexit strategy melt down, British Prime Minister Boris Johnson travels to Dublin today to meet Leo Varadkar. Now that opponents have — at least according to the law — taken no deal off the table, Johnson is under increasing pressure to show he’s making progress on finding alternatives to the contentious Irish backstop.

In Case You Missed It

Wine Duties | The U.S. is moving ahead with an investigation into a new French digital tax that could lead to tariffs on the country’s famed wine, despite hopes raised at August’s G-7 summit. The probe is being conducted under the same statute used by the U.S. to levy tariffs on China and could clear the way for targeting billions in French exports to the U.S.

Eastern Detente | Ukraine and Russia exchanged dozens of prisoners, signaling a bid to ease five years of conflict as President Vladimir Putin seeks to lift U.S. and European sanctions. For Putin — faced with a slowing economy — the swap may demonstrate goodwill to resolve the war between Ukrainian forces and Kremlin-backed fighters.

Greek Demands | Prime Minister Kyriakos Mitsotakis said he’ll make the case for Greece’s creditors to ease budget-surplus demands while the country prepares to request a partial early repayment of IMF loans. Mitsotakis has his work cut out for him in requesting leniency from his EU partners.

Greening France | French President Emmanuel Macron won praise for putting the Amazon forest fires at the top of the global agenda, but back at home green advocates would like to see less talk and more action. Here’s why.

Chart of the Day

France has the least open economy in the euro area and consumer staples such as food and pharmaceuticals make up a large share of the country’s exports, according to Bloomberg Economics. That makes the economy comparatively sheltered from cyclical swings in external demand and resilient to the global slowdown.

Today’s Agenda

All times CET.

• 11:15 a.m. ESM Managing Director Klaus Regling at the Dutch House of Representatives in The Hague
• Foreign policy chief Federica Mogherini co-chairs the second EU-Cuba Joint Council in Havana
• EU antitrust chief Margrethe Vestager addresses the Danish Association for Competition Law in Copenhagen and meets Denmark’s Finance Minister Nicolai Wammen
• Italian government faces confidence vote in the lower house
• International Atomic Energy Agency board meeting begins in Vienna
• Estonian finance ministry to unveil new economic forecasts
• Czech government is expected to approve 2020 budget draft
• U.K. monthly GDP estimates

--With assistance from Alessandro Speciale and Zoe Schneeweiss.

To contact the editor responsible for this story: Heather Harris at hharris5@bloomberg.net, Chris Reiter

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