Brussels Edition: A Fragile Coalition
(Bloomberg) -- Welcome to the Brussels Edition, Bloomberg’s daily briefing on what matters most in the heart of the European Union.
The election in the German state of Hesse, home to the financial center of Frankfurt, left the establishment parties with their worstshowing in decades — but just about allowed Chancellor Angela Merkel’s Christian Democratic Union to claim victory. The election, two weeks after Bavaria delivered a similar result, leaves the grand coalition of the CDU/CSU and the Social Democratic Party in serious peril, while the Greens and far-right AfD made further strides. Merkel will address the result at a press conference today in Berlin.
Stop the Clock | We hope you enjoyed the extra hour of sleep yesterday because it may soon be a thing of the past. EU transport ministers in Vienna today will discuss a proposal to scrap summertime clock changes. The plan follows a survey (at the height of summertime) by the Commission that produced more than 4.6 million responses and showed that 84 percent want to abolish the clock change.
No-Deal Budget | U.K. Chancellor of the Exchequer Philip Hammond will deliver his 2019 budget today. The much-anticipated spending plan is supposed to prepare the U.K. for life after the EU, but Hammond will also be presenting a blueprint to protect Britain from economic oblivion. The British treasury chief warned yesterday that, if it fails to secure a Brexit deal with the EU, the U.K. will need new tax and spending plans and may have to extend austerity policies.
Croatian Aspirations | The European Commission’s Vice President for the euro, Valdis Dombrovskis, heads to Croatia today to meet with the country’s prime minister and top finance officials, who hope the nation is on track to join the euro-area waiting room by 2020. After Greece’s struggles and money-laundering scandals in recent entrants such as Latvia, the EU may look for more than the key membership criteria.
In Case You Missed It
Italian Intervention | The Italian government would step in to help in the event of a crisis in the banking sector, Finance Minister Giovanni Tria said on Saturday, echoing comments made by one of the two coalition leaders. “There are no dangers” for the banks currently, Tria said, estimating the main risk is elevated bond spreads tied to “political uncertainties,” rather than concerns about Italy’s budget proposals.
Brexit Banking | Banks shouldn’t expect regulators to help them cope with disruptions caused by Brexit, the head of the euro area’s bank-failure agency, Elke Koenig, told the Financial Times in an interview. The head of the Single Resolution Board also warned that banks relocating to the region need to move enough workers and data systems to allow the agency access to information.
.. and if there’s No Deal? | If you want to know why a no-deal Brexit will be such a nightmare for banks, look no further than here.
Danske Fallout | Danske Bank’s money laundering scandal and a massive dividend-tax fraud now look set to influence elections due to be held in Denmark next year. Politicians are promising major changes to how the financial industry will be policed, seeking to win voters stunned by the scale of allegations against the country’s biggest bank, and by revelations that state coffers were systematically robbed by bankers who found a loophole in tax laws.
Chart of the Day
The European Central Bank’s toughest ever review of lenders’ models will leave most with smaller capital cushions, according to people familiar with the matter. The majority of the 65 banks scrutinized by the supervisor have been forced to take a more conservative view of their businesses, chipping away at their capital strength.
All times CET.
- 1 p.m. German Chancellor Merkel holds a press conference on the Hesse election results
- Informal meeting of EU transport and environment ministers in Vienna
- EU Commission Vice President Dombrovskis visits Croatia, meets Prime Minister Andrej Plenkovic, Finance Minister Zdravko Maric and National Bank Governor Boris Vujcic
- A European Parliament Committee delegation visits Rome to discuss Italy’s economic outlook, financial stability and developments in the banking sector. Meets Bank of Italy Governor Ignazio Visco, Finance Minister Tria
- Chancellor of the Exchequer Hammond delivers Budget Statement in House of Commons
- EU Humanitarian Aid Commissioner Christos Stylianides visits U.S. to discuss Europe’s humanitarian actions
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