Brussels Edition: Bracing for Backlash

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

The European Parliament leadership will meet Commission President-elect Ursula von der Leyen in Strasbourg today and assign her incoming team of EU commissioners specific slots for confirmation hearings between Sept. 30 and Oct. 8. While von der Leyen already got the parliament’s green light, several of her team members may get a rough ride with the assembly, which has made a habit over the past 15 years of claiming a scalp or two at this stage of the process. Von der Leyen could also face some serious backlash today over her controversial decision to name the migration portfolio “Protecting the European way of life.” 

What’s Happening

Running Out of Road | Brexit from afar is increasingly looking like a disaster about to happen. One European official, watching the situation up close, compared it to two cars driving at high speed toward each other, each expecting the other to swerve out of the way first. As things stand, the U.K. is leaving the European Union on Oct. 31 without a deal and no one quite knows how to stop a scenario that neither side wants. 

Gas Talks | Russia and Ukraine will restart natural gas talks today, with the EU seeking to avoid import disruptions by brokering a deal before a transit agreement between its two eastern neighbors expires at year-end. While a recent exchange of prisoners between the two nations signaled a bid to ease five years of conflict, tensions between the EU and Russia over gas supplies haven’t subsided. 

Greek Banks | Greece plans to provide as much as 9 billion euros in state guarantees to help its banks  reduce a mountain of soured debt weighing on their balance sheets and restricting their ability to lend. The initiative, similar to a program used in Italy, depends on antitrust officials in Brussels ruling that it doesn’t constitute illegal state aid — a decision expected over the next few weeks. 

Pricey Flats | Portugal has become western Europe’s most dynamic property market thanks in part to tax incentives for foreign buyers and the so-called golden visa program, which offers residence permits in return for a minimum 500,000-euro investment. The flip side for many local people is that they have become collateral damage with no prospect of prices cooling any time soon.

In Case You Missed It

Libra Troubles | The German government delivered a blow to Facebook’s planned cryptocurrency, saying blockchain technology shouldn’t be used to develop private forms of money. The statement, following a cabinet meeting on the matter, expands Europe’s opposition to the social network’s financial ambitions and echoes the view of France as well as skepticism from Washington.

Bank Probe | Deutsche Bank faces another potential clash with regulators as the ECB weighs opening a formal investigation into unapproved purchases of its own subordinated bonds. While this would pale in comparison with other misconduct, another probe would be an unwelcome distraction for CEO Christian Sewing, who has said the bulk of the firm’s legal woes are behind it.

Swedish Boost | Sweden’s Social Democrat-led government is sticking to a surplus regime even as economic growth stalls and the labor market shows signs of rapid deterioration. With key interest rates below zero, calls have mounted for the government to boost borrowing and spending to make investments and support municipalities struggling under costs of growing welfare needs.

Now or Never | The EU has a crucial chance to push for further integration as a new commission taking office coincides with a favorable political backdrop, Goldman Sachs said. A weakening German economy that might erode opposition to integration, a temporary waning in populist support and an imminent Brexit could help boost the bloc’s reform impetus, according to the bank.

Show of Unity | Emmanuel Macron and his dinner host Giuseppe Conte pledged to work together to boost flagging economic growth across Europe and share the handling of migrant flows, seeking to turn the page on recent clashes between their two countries. After initial talks at Conte’s official residence in Rome, the French president described the France-Italy friendship as indestructible and underscored “our will to work together for the European project.”

Chart of the Day

Polish citizens have never been more upbeat about their economic prospects. The ruling party’s pre-election welfare promises are boosting consumer confidence, though some economists and business groups have expressed skepticism. 

Today’s Agenda

All times CET.

• 10 a.m. European Parliament’s Conference of Presidents to meet with Commission President-elect von der Leyen
• 12 p.m. ESM Managing Director Klaus Regling speaks at Sustainable Architecture for Finance in Europe Panel in Frankfurt
• EU diplomats meet to discuss latest developments in the Gulf
• Bank of Finland Governor Olli Rehn attends hearing at Finnish parliament

--With assistance from Joao Lima and Ian Wishart.

To contact the editor responsible for this story: Benedikt Kammel at bkammel@bloomberg.net, Chris Reiter

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