Brussels Edition: German Aftershocks

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

What do the dramatic events in Berlin mean for the EU? An informal survey in the Brussels bubble shows there are two camps. The optimists don’t expect much to change, even suggesting that Angela Merkel may stake more on building a European legacy before her departure. The pessimists — who are in the majority — see the slow crawl of EU reforms coming to a standstill until the future direction of the CDU party and Germany have been clarified. “To make real progress, Berlin will need clear majorities and political vision, which won’t be available during the transition period,” Bruegel Director Guntram Wolff told us. It’s not the first time everyone will be waiting for German elections. Only this time, they’ll be too close to the next French election, meaning any strategic decisions may have to wait until 2022.

What’s Happening

Toughened Stance | Commission President Ursula von der Leyen and her Brexit negotiator Michel Barnier address the European Parliament this morning on negotiations with the U.K. As if the path wasn’t rocky enough, member states have toughened some of the language in the EU’s draft mandate, and the two officials are likely to signal that the road ahead will be far from straightforward.

Lagarde Grilled | The fallout from the coronavirus on the euro area is a topic likely to be addressed by ECB President Christine Lagarde, who speaks at the European Parliament in Strasbourg today. Lawmakers are also likely to question her about the central bank’s policy review.

Irish Election | Ireland’s politicians will turn to forming a government after Sinn Fein smashed the two-party system that dominated the country for much of its history. With no party close to a majority, expect lengthy negotiations.

American Priorities | Following months of promises that the U.K. would be next in line for trade talks with Donald Trump’s administration, U.S. officials say an EU deal might still be prioritized. That’s after the bromance between the U.S. president and Boris Johnson took a hit after the British prime minister ignored U.S. advice over Huawei.

In Case You Missed It

Spin Machine | Since winning a historic majority in the U.K. general election two months ago, Johnson has used his power to exert a tight grip on the way his administration communicates with the world. His team is keen to ensure that it controls the premier’s message. Here’s a deep dive into the Downing Street spin machine. 

Climate Siege | BlackRock’s Paris office was briefly barricaded by climate activists yesterday to protest investments they said were damaging the environment. The siege came after Chief Executive Officer Larry Fink said last month that his firm will take steps to address the climate issue across the thousands of companies in which it invests.

Turkish Fighting | Forces loyal to Syrian President Bashar al-Assad killed five Turkish soldiers in the northwestern province of Idlib yesterday, pouring fuel on their confrontation shortly after Turkey’s leader ordered a massive deployment to force a Syrian withdrawal. The fighting in Syria could have ramifications for Europe. 

British Houses | Years of rapidly rising house prices means that a generation of Britons may have to rent their homes into old age, according to new analysis published Monday. U.K. house prices have tripled over the past two decades and risen at an even faster pace in London.

Energy Efficiency | Global emissions from energy held steady in 2019 for the first time in three years as developed nations continued to move away from coal power and toward renewable energy and natural gas. The EU lowered emissions by 5%, with three quarters of that coming from the power sector increasing renewables and switching from coal to gas.

Chart of the Day

France’s central bank is expecting a punchy rebound at the start of the year after a surprise contraction at the end of 2019. A prompt French recovery would be reassuring for policy makers who are looking for signs of a stabilization in the euro-area economy. 

Today’s Agenda

All times CET.

• 9 a.m. Commission President von der Leyen addresses the European Parliament on negotiations of a new partnership with the U.K.
• 11 a.m. Eurostat to release industrial production reading for December 2019
• 11 a.m. NATO Secretary General Jens Stoltenberg briefs press ahead of alliance’s defense ministers meeting 
• 11:45 a.m. U.S. Permanent Representative to NATO Ambassador Kay Bailey Hutchison will hold a press briefing
• 3 p.m. ECB President Lagarde presents institution’s annual report to the EU Parliament
• 4:15 p.m. EU foreign policy chief Josep Borrell debates war in Syria and recent U.S. peace plans for Israel and Palestine with MEPs in Strasbourg; Borrell will also discuss the situation in Syria at 5:30 p.m. 
• Parliament in Skopje to vote on North Macedonia’s NATO accession protocol
• Slovenian political parties continue talks on how to break a deadlock triggered by the sudden resignation of Prime Minister Marjan Sarec

--With assistance from Zoe Schneeweiss, Ian Wishart and Viktoria Dendrinou.

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

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