Brussels Edition: Passing the Brexit Baton

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

Who will be the prime minister to finally take the U.K. out of the EU? We will know the identity of Theresa May’s successor around mid-July, at the end of a leadership contest that officially starts on Monday when nominations close. There’s no shortage of candidates. Many of them want to renegotiate a better Brexit deal with the EU, having been told countless times that isn't possible. Some, like frontrunner Boris Johnson, say they’re prepared to walk away without an agreement on Oct. 31; others say they want to take their time to extract more concessions. Whoever eventually walks into Downing Street is unlikely to make as much of an impact on the EU position as they currently claim. 

What’s Happening

Big Jobs | As the Conservative contest rolls on in the U.K., the EU’s Brexit negotiator Michel Barnier continues his unofficial push to get a top EU job. A group of six premiers negotiating high-level appointments are meeting for a dinner in Brussels tonight to discuss the way forward. With no signs of a consensus in sight, we recommend that you play our game and run our simulations before they meet. 

Huawei Stance | European telecoms ministers will discuss the bloc’s future tech policy as well as cybersecurity issues today, just as U.S. President Donald Trump softens his approach on European allies’ use of Huawei Technologies Co. products. Washington has previously threatened to stop intelligence-sharing with allies who don’t ban Huawei, but Trump this week dismissed the idea of cutting off Britain.

Swiss Clock | Switzerland may deliver its verdict on whether it agrees to a proposed framework agreement to replace the patchwork of some 120 treaties that govern its bilateral relations with the EU as soon as today (and in any case soon). Brussels needs a positive sign from Bern to extend access to the Swiss stock market for EU-based traders beyond the end of this month. 

Week Ahead | Margrethe Vestager, the EU’s antitrust chief tipped for a top EU job, is due to block her sixth deal this month with a veto to the Thyssenkrupp and Tata Steel joint venture. Also next week, Italy’s defiance in the face of EU warnings about the state of its finances, the tedious discussion about a miniature euro-area budget and an as-yet-incomplete banking union will dominate a gathering of the bloc’s finance ministers in Luxembourg. 

Quiz Answer | EU finance ministers are also expected to discuss plans by 10 member states to introduce a financial transactions tax. Speaking of which, here’s the answer to our quiz from yesterday: the latest projections show that the so-called “Robin Hood” levy will result in revenue of some 3.5 billion euros per year, or around 94% less than the European Commission’s estimates when it introduced the plan in 2011. 

In Case You Missed It

Populist Probe | An Austrian group that lists U.S. conservative entities like the Heritage Foundation and the Atlas Network among its partners is at the heart of a brewing scandal on how an alliance of Europe’s nationalists is funded. Last year, ACRE got bigger donations from entities run by and individuals close to Barbara Kolm, a libertarian Austrian economist and a member of the country’s nationalist Freedom Party. Her funding is now being questioned.

National Champions | One of our loyal readers asked us to take a deep dive into the ongoing EU debate about national champions and the potential overhaul of antitrust rules to allow European companies to grow big enough to compete with China. You asked, and we deliver.

Going Dutch | Speaking of EU champions, a big one may be brewing. Following the collapse of merger talks between Deutsche Bank and Commerzbank, the German government is probing the possibility of a tie-up between Commerzbank and ING Groep,  one option to forge a European financial heavyweight.

Car Crash | And as one merger sprouts, another falls by the wayside. After talks for the creation of a Franco-Italo-American champion suddenly collapsed, the French government and Fiat Chrysler started a blame game, accusing each other for the failure. But the deal may not be completely dead. 

 

Chart of the Day

Those of you who are paying a mortgage can rejoice, as the European Central Bank extended its pledge to keep interest rates unchanged at rock bottom levels through at least the first half of next year, six months longer than previously promised. Mario Draghi also said that the ECB won’t shy away from even more aggressive action to support the euro-area economy during a period of weakening growth.

Today’s Agenda

All times CET.

• 8 a.m. EU Commission Vice President Jyrki Katainen speaks at a conference in Helsinki on EU defense and security policy
• 9 a.m. European telecoms ministers gather in Luxembourg where they are set to discuss the bloc's future tech policy as well as cybersecurity issues, weeks after the U.S. blacklisted Huawei 
• 12 p.m. National Bank of Belgium gives bi-annual economic projections 
• 7 p.m. Meeting in Brussels between the Prime Ministers of Belgium, Croatia, Spain, Netherlands, Latvia and Portugal, the negotiators selected for the process of nominations for upcoming European posts
• Theresa May steps down as Conservative Party leader

--With assistance from Alexander Weber, Aoife White, Viktoria Dendrinou and Fergal O'Brien.

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

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