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Brussels Edition: No Big Bazooka

Brussels Edition: No Big Bazooka

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

After two years of tense negotiations, the euro zone may finally get its own budget — if finance ministers strike a deal at a meeting in Luxembourg today. But hold the fireworks. The final compromise will fall far short of the sweeping vision of proponents such as Emmanuel Macron, who called for a tool to help economies weather financial crises. Crucially, its already limited firepower is still up for debate. Optimists hope that what will be agreed today is a seed for something bigger, and not a rounding error in EU finances which will soon be forgotten.

What’s Happening

Pipeline Threat | Donald Trump intensified criticism of Germany as he threatened sanctions over Angela Merkel’s continued support for the Nord Stream 2 gas link from Russia and warned that he could shift troops away from the NATO ally over its defense spending. Echoing previous threats, the U.S. president said he’s looking at sanctions to block the pipeline he’s warned would leave Berlin “captive” to Moscow. The U.S. hopes to export its own liquefied natural gas to Germany.

Top Jobs | From the corridors of the European Council in Luxembourg, to the beaches of San Sebastian and the palaces of Budapest, EU leaders and mandarins will be negotiating today who’s going to get which top job at the bloc’s key institutions. With no sign of a breakthrough ahead of a crunch summit next week, the big question remains: What’s Germany’s priority?

What’s Gmail? | Google gets to hear if the EU’s top court is on its side in a battle with German regulators over whether Gmail is a telecoms service that would be covered by existing regulation. It’s one of several regulatory fights Google is taking to the European Court, with the right to be forgotten and three massive antitrust fines still to come.

Nationalist Dream | A European Parliament far-right faction will re-establish itself today with more of a whimper than the bang promised before last month’s elections. The nationalist alliance, which includes Italian Deputy Premier Matteo Salvini, France’s Marine Le Pen and Germany’s AfD, will hold around 10% of the seats in the new European assembly, up from 5%. Conspicuous by his absence will be Nigel Farage, in a sign of traditional divisions among anti-EU forces.

In Case You Missed It

Italian Distraction | Italy, while not officially on the agenda of today’s meeting of finance ministers, is on everyone’s minds. Despite EU warnings about the state of Italian finances, markets helped by Mario Draghi’s latest bonanza are sanguine; which is convenient for the EU, because there’s little risk of an imminent crisis, but also unfortunate, as it minimizes pressure on Rome to put its house in order.

Are EU Ready? | The EU said it’s ready for the U.K. to leave the bloc without a deal and isn’t planning any further contingency measures. The progress report on the bloc’s no-deal Brexit planning, was published as Boris Johnson launched his leadership campaign in London, saying that while he isn’t aiming for a no-deal Brexit, he will make sure the U.K. leaves on Oct. 31.

Manufacturing Meltdown | Concern is growing in markets and even at the European Central Bank that the services sector won’t be able to withstand a broader manufacturing slump. That would undermine jobs growth and domestic demand, the main pillars propping up confidence in the outlook for the euro-area economy.

Quiz Time | And now for our weekly quiz: Which former senior euro-zone official recently published their debut crime novel? Find the answer in tomorrow’s newsletter.

Chart of the Day

Brussels Edition: No Big Bazooka

Some 114 central banks are regular users of Twitter, according to a study by research group OMFIF. Together, they represent about 60% of all monetary institutions and have about 7 million combined followers. Social media activity is now a “pillar of central banks’ communications strategies,” OMFIF economists Danae Kyriakopoulou and Pierre Ortlieb said.

Today’s Agenda

All times CET.

  • 9 a.m. EU trade chief Malmstrom speaks at Bruegel event in Brussels
  • 10:30 a.m. 7th Annual Meeting of ESM Board of Governors in Luxembourg
  • 11 a.m. Eurostat publishes April industrial production reading for euro area
  • 1 p.m. Euro-area finance ministers meet in Luxembourg
  • EU Energy Commissioner Sefcovic in Moscow, meets Russian Energy Minister Novak
  • EU Social Policy Ministers meet in Luxembourg, hold a vote as part of the selection procedure for the seat of the European Labour Authority
  • EPP Group Presidency meets in San Sebastian, Spain
  • EU digital services chief Ansip delivers keynote speech at “Can we regulate for innovation and can we innovate in regulation?” event in Brussels
  • EU top court rules on a question from a German court seeking guidance on whether Gmail can be regulated by Germany’s network agency
  • German coalition leaders begin two-day meeting in Berlin

--With assistance from Marine Strauss, Aoife White and Jonathan Stearns.

To contact the editor responsible for this story: Zoe Schneeweiss at zschneeweiss@bloomberg.net, Iain Rogers

©2019 Bloomberg L.P.