Brussels Edition: Taking on Dealmaker Donald Trump

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

After declaring victory in his trade spat with China, Donald Trump is turning his attention to Europe — again. In Davos, he reserved his harshest words for the EU, reviving tariff threats should the bloc fail to move quickly toward an unspecified commercial deal. European Commission President Ursula von der Leyen is taking a page out of her predecessor’s book by preparing a Washington visit in February to lay out a road map for smoother transatlantic trade ties. With no political willingness in the EU to negotiate farm-duty cuts sought by the U.S., expect von der Leyen to cook up a package of small-bore measures. Whether that will satisfy Trump is anybody’s guess. Then again, Jean-Claude Juncker bought a trade truce in 2018 with a few soybeans.

What’s Happening

Review Time | ECB President Christine Lagarde is poised to formally announce her strategic review today, as officials deciding how to assess monetary policy plan a two-part approach that separates price-stability targeting from other aims. Such a division of labor allows policy makers to keep the core matter of reviving inflation distinct from secondary goals such as climate change.

Succession Trouble | The viability of Italy’s coalition is in question after Luigi Di Maio resigned as leader of the anti-establishment Five Star Movement, setting the stage for a bruising succession battle that threatens to destabilize the government. Prime Minister Giuseppe Conte canceled his trip to Davos and will instead have to focus on the mounting tensions within the coalition ahead of crucial regional elections.

Nearly Over | Britain took another significant step away from the EU last night when the House of Lords accepted the House of Commons’ rejection of amendments to the Brexit Bill, paving the way for the deal to become law. On the other side of the English Channel, an influential European Parliament committee will today vote on the deal, before the full assembly has its say on Jan. 29.

5G Risks | The EU will advise its members to consider banning some suppliers from parts of their 5G networks, in a policy document due to be unveiled on Jan. 29. This “toolbox” of measures to help mitigate risks arising from 5G don’t explicitly mention China, but the recommendations will help EU governments decide whether to limit the access of Huawei and other Chinese vendors.

In Case You Missed It

Tax Truce | French Finance Minister Bruno Le Maire agreed to delay collecting a tax on multinational digital companies until the end of 2020 in exchange for the U.S. refraining from imposing punitive tariffs. The deal provides some respite from escalating threats between the U.S. and the EU, but leaves open the question of how global talks on such a levy could progress over the coming months. 

Spanish Fuel | Spain last year cut use of coal faster than anyone else in western Europe as renewable energy and cleaner natural gas take over. The nation’s lead in exiting coal is helped by having some of the best renewable resources which, coupled with subsidies, has stimulated more power capacity than needed to keep the lights on.

Merkel Misgivings | Angela Merkel is running out of time to reset the German economy before her era as chancellor draws to a close. The Group of Seven’s longest-serving leader weathered the financial crisis and Europe’s debt turmoil, but in the final full year of her tenure, as Germany’s economic problems fester, lawmakers are starting to ask if Merkel — who addresses the World Economic Forum in Davos today — has the vision and energy to fix them.

Threats and Cuts | Hard-line French unions protesting Emmanuel Macron’s pension reform are deploying tools such as death threats, power cuts, tossed boots and blockades as a record-long transport strike fizzles out and a bill on the new system heads to parliament. But with the strike all but over, the government seems emboldened and set to press ahead with its planned overhaul.

Chart of the Day

Global growth just finished its weakest year in a decade, but it would have been even worse if it hadn’t been for central banks, according to the International Monetary Fund. The Washington-based institution said growth in 2019 and 2020 would be 0.5 percentage point weaker without their stimulus push.

Today’s Agenda

All times CET.

• 2:30 p.m. Press conference following the meeting of the Governing Council of the ECB 
• World Economic Forum continues in Davos
• Eurostat to release data on renewable energy
• EU Parliament Constitutional Affairs Committee to vote on granting its consent to the EU-UK Withdrawal Agreement
• EU Parliament Internal Market and Consumer Protection Committee to vote on a resolution addressing several challenges arising from the rapid development of AI

--With assistance from Michael Winfrey and Zoe Schneeweiss.

To contact the editor responsible for this story: Vidya N Root at vroot@bloomberg.net, Andrew Blackman

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