Brussels Edition: America First, Kurz Comeback, Tories Get Together

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

Europe’s relationship with the U.S. has been stretched to the limit by Donald Trump’s “America First” foreign policy. Washington is blocking appointments to the World Trade Organization’s appeals board, which will render the global commercial order inoperative in December; controversial U.S. duties on Spanish olives pose a threat to Europe’s system of farm aid; and disputes over aircraft subsidies and auto tariffs over the next two months could push the allies to an all-out trade war. The WTO may blow the horn as soon as today by releasing a report authorizing the U.S. to retaliate against the EU over illegal subsidies to Airbus. 

What’s Happening

Brexit Milestone | Just as it did in 2017 and 2018, the Conservative Party conference in Manchester will serve as something of a Brexit watershed, with the floodgates ready to open as soon as it’s over on Wednesday and Boris Johnson finally publishing proposals to revise the withdrawal deal. That’s the EU’s hope, anyway. But while Boris Johnson had planned to use the annual convention to launch his campaign to win the next general election, he instead is fighting for his credibility as prime minister as he faces allegations of sexual impropriety and plots to oust him.

Kurz’s Comeback | Austria’s wunderkind is back, but he needs to make new friends. After his People’s Party won 37.1% of the vote in yesterday’s elections, the 33-year-old Sebastian Kurz is set to return as chancellor. Yet forming a coalition will be more challenging than last time around, with the Green Party surging and his erstwhile partner the Freedom Party registering its worst showing since 2006.

Italy’s Budget | Italy’s government is due to unveil the outline of next year’s budget tonight, seeking to reassure the European Commission and foreign investors that the country will contain its deficit. The question is where will the necessary savings come from, given that the coalition has ruled out painful measures such as an automatic increase in value added tax set to kick in.

Ukrainian Breakthrough | Fallout from Donald Trump’s phone call with Ukraine’s leader is reverberating far beyond Washington. The revelation of President Volodymyr Zelenskiy lashing out at his European allies came just as Germany and France eye a breakthrough this week in four-way talks with Ukraine and Russia.

In Case You Missed It

Balkan Expansion | The EU will probably authorize the start of formal accession negotiations with Albania and North Macedonia in two weeks, betting that the prospect of membership in the club will help further anchor the continent’s troubled Balkan region to the West. That’s according to the latest draft of a joint communique circulated to EU governments and seen by Bloomberg.

Lagarde’s Challenge | When Christine Lagarde takes charge of the European Central Bank, she’ll inherit the policy disputes of her predecessors – now with even deeper scars. Check out her interview with Bloomberg, in which she offered insights into her likely management style, and even the inspiration she draws from the Pope.

Modified Babies | Will Russia follow in the footsteps of a rogue Chinese researcher and produce genetically modified children? The answer may lie in the hands of Vladimir Putin’s eldest daughter, Stepan Kravchenko reports

Nuclear Fusion | About two dozen private companies around the world are working to harness a transformative energy technology that could rescue the planet from climate catastrophe. Here’s why the unlimited promise of nuclear fusion may now – finally – be within our reach. 

Chart of the Day

Brussels Edition: America First, Kurz Comeback, Tories Get Together

Italy’s government is weighing a number of measures to incentivize electronic payment as part of a battle against chronic tax evasion. Under one scenario, using cash could be as much as 3% costlier than a credit card, according to local media. That’s bad news for Italians, who use plastic payments less than citizens from any other euro-area country.

Today’s Agenda

All times CET.

  • 11 a.m. Eurostat to release euro-area unemployment for August
  • 4:30 p.m. EU Council President Donald Tusk meets European Commission President-Elect Ursula von der Leyen
  • 6:30 p.m. Confirmation hearing for incoming EU trade chief Phil Hogan at EU Parliament
  • The WTO is due to release a report authorizing the U.S. to retaliate against the EU for illegal Airbus subsidies
  • U.K. Conservative Party's annual conference
  • ECB Chief Economist Philip Lane speaks in Los Angeles
  • Italy expected to publish 2020 budget framework
  • Lawsuit by VW owners for diesel cheating begins in Germany

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