Brussels Edition: Oh, Vienna

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

Of all the patchwork European coalitions that could fall apart, who would have bet on Austria’s coming unstuck first? The Alpine nation joins the list of snap elections across the continent this year after a video compromised Chancellor Sebastian Kurz’s junior partner, the Freedom Party. The collapse is a major blow for one of Europe’s most successful populist parties a week before EU elections in which nationalists are seeking to take another bite out of the establishment.

What’s Happening

Election Guide | Stakes are high for the EU as voters from its 28 members cast ballots this week to elect their representatives for the European Parliament. The rise of populism, a post-Merkel leadership vacuum, trade wars and the ever-lasting Brexit drama loom large. To help make sense of it all, here’s a guide to how the election works, what the Parliament looks like now and what to expect. We’ll also be reporting from the key European battlegrounds this week, starting with France…..

Macron’s Big Test | When the Yellow Vest protests spread across France late last year, Emmanuel Macron tried to take the high road and stumbled. With images of burning streets and smashed symbols of French heritage still fresh, Macron faces a tight race in Sunday’s European elections. If he loses — and according to some recent polls he might — it could further undermine the French president’s grand plans for tighter EU integration.

May Goes Bold | Theresa May said she is poised to make a “bold” new offer to members of parliament in a bid to pass her Brexit deal, after talks with Labour collapsed and as her party faces major losses in this week’s EU elections. Jeremy Corbyn, meanwhile, went further in his support for a second referendum, saying the public should get a vote on his party’s own Brexit deal, not just May’s.

Cyber War | Nigel Farage’s newly-created Brexit Party is threatening to wipe the floor with May’s Conservatives in the EU vote and one reason for his surge in the polls may be his dominance of social media. With a series of polished and professionally produced videos, Farage’s movement is outspending the established parties online and winning the contest for voters’ attention.

Arrivederci Mario | Mario Draghi has five months left in office at the ECB, and yet more years of work ahead if he wants it. His pending exit in October has sparked speculation back home in Italy over whether he’ll retire from public life or return one day to participate in the nation’s fractious political scene. In the meantime, the race to succeed him is wide open. Here are the top contenders.

In Case You Missed It

Merkel’s Warning | Angela Merkel warned Europeans against falling sway to populists, evoking the continent’s wars in a proxy showdown with Italy’s deputy premier. As some of the region’s top nationalists rallied in Italy, Merkel’s first full-scale campaign event ahead of the EU elections illuminated the choices facing voters. For the German Chancellor, too, the result could be consequential amid pressure from her chosen successor to resign after the ballot.

Swiss Taxes | Switzerland approved an overhaul of the corporate tax code, choosing to stay an attractive base for companies like Procter & Gamble and Caterpillar. The outcome, which ends years of wrangling and a failed attempt two years ago, ensures the country will remain a low tax domicile and still is compliant with international rules.

Icelandic Leather | The Dutch may have won this year’s Eurovision contest, but Icelandic heavy-metal bondage trio Hatari stole the show — and not just because of their performance. The leather-clad group, who call themselves anti-capitalist and techno-dystopian, unveiled Palestinian banners while the public vote for their song was announced, prompting TV footage to cut away within seconds.

Chart of the Day

Swiss voters also backed new restrictions on semi-automatic firearms in a referendum yesterday, averting a potential standoff with the EU. While Switzerland has declined to join the 28-country bloc, it is a member of the open-border Schengen area and therefore must harmonize its weapons laws.

Today’s Agenda

All times CET.

• 1 p.m. EU Council President Tusk meets French President Macron in Paris
• Informal meeting of EU environment ministers in Bucharest
• EU trade chief Malmström in Kiev, meets Ukraine Prime Minister Hroisman

To contact the editor responsible for this story: Heather Harris at hharris5@bloomberg.net, Iain Rogers

©2019 Bloomberg L.P.