Brussels Edition: Merkel’s Billions for The Planet

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

Climate talk is in the air. In Germany, the government will try again today to find agreement on measures to step up the battle against environmental degradation after negotiators holding marathon talks overnight failed to reach a deal. Chancellor Angela Merkel’s coalition is working on an investment package worth billions of euros to cut carbon emissions and considering moves that would have profound consequences for companies from utilities to airlines. Today in Brussels, EU transport ministers will also debate emission reduction. That’s less than a week after the bloc’s finance chiefs discussed climate change, a sign of just how central the issue is becoming for policy makers. Topping off the action is a special United Nations summit next week in New York to debate ways to aggressively reduce emissions.

What’s Happening

Barclay’s Back | Brexit Secretary Steve Barclay returns to the European Commission today as talks to change the U.K.’s deal to exit the EU pick up six weeks before departure day. The U.K. yesterday delivered written ideas for what the accord should look like but stopped short of the formal proposals officials are demanding. Still, Commission President Jean-Claude Juncker thinks a deal can be reached by Oct. 31, Sky News reported, citing an interview to be broadcast Sunday.

Draghi Farewell | Next week starts with a farewell in Brussels. On Monday, the EU Parliament’s economic affairs committee will hold its last exchange with Mario Draghi before he leaves office at the end of October. It’ll be a chance for lawmakers to quiz the outgoing ECB chief about his latest stimulus package and pay tribute at the end of his eight-year tenure. 

Prosecutor Pick | EU ambassadors backed a former anti-corruption crusader from Romania to become the bloc’s first chief prosecutor, defying objections from her own government and other leaders’ endorsement of a rival candidate. The approval may set the stage for future conflicts with countries like Poland and Hungary, which have clashed with Brussels over the rule of law.

In Case You Missed It

OECD Gloom | Trade conflicts have sent global growth momentum tumbling toward lows last seen during the financial crisis, and governments aren’t doing enough to prevent long-term damage, the OECD warned. It’s the latest institution sounding the alarm over the state of the global economy after the Fed, the ECB and several of their peers eased policy to shore up demand.

Trade Hurdle | A key committee in Austria’s parliament rejected a draft free-trade pact between the EU and Mercosur countries over concerns about fires in the Amazon, the latest sign of European resistance to the agreement reached in June. The move comes a month after French President Emmanuel Macron branded Brazil’s leader a liar and threatened to block the deal. 

Free Money | The ECB’s latest offer of free cash to lenders attracted little interest yesterday in a sign of just how much liquidity is already in the financial system. The loans are part of a package to boost growth, but banks have little trouble accessing funds following years of loose monetary policy and some are even keen to turn away deposits to avoid charges from negative rates.

WTO Blow | The EU’s effort to save the WTO was dealt a blow with one of the last three members of its dispute-resolution panel mulling retirement. The voluntary departure of U.S. lawyer Thomas Graham would accelerate the appellate body’s looming demise and force countries to rethink their reliance on the WTO to settle the surging number of trade disputes.

Chart of the Day

The record-breaking rally for European government bonds is facing a major test, as euro-area nations turn to fiscal stimulus in the fight to revive the region’s struggling economy. The Netherlands and Finland have taken the first steps after the ECB’s call for more spending. But strategists say any threat posed to the bond market bull run — from a sustained increase in supply at first and then via inflation — depends on Germany’s response.

Today’s Agenda

• EU transport ministers meet in Brussels to debate transport, climate change

• EU trade chief Cecilia Malmström delivers keynote address at Businesseurope event in Brussels

• March for the Climate takes place in Brussels

• Merkel’s Cabinet meets in Berlin to decide on climate policy

--With assistance from Ian Wishart.

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

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