Brussels Edition: Poland’s Trouble With the Law

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

Poland’s escalating spat with Brussels over the erosion of democratic standards may make for some awkward moments when the European Union Rule of Law Chief Vera Jourova meets today with justice officials from the government and the country’s embattled judiciary. Her visit to Warsaw comes just days after the Polish government summoned the EU ambassador in protest over remarks that the bloc was “very concerned” about the state of democracy in the country. But with little sign that Warsaw plans to back down, the top EU court could soon suspend Poland’s disciplinary regime for judges and even impose fines — further aggravating a long-running dispute with unpredictable ramifications and increasingly visible market impact. 

What’s Happening

Brexit Demands | With Brexit finally happening on Friday, here’s a look at what will change and what will stay the same as of Feb. 1. As for talks on the future relationship, the EU’s 27 remaining members agreed to pursue a tough line, putting them on collision course with the U.K. government.

EU’s Pain | While much of the focus has been on how the divorce might impact the U.K., EU businesses also have plenty at stake. Click here for a deep dive into which goods, sectors and countries will be hit the most if there’s no follow up deal by the end of the transition period. 

5G Decision | Boris Johnson could decide as soon as today whether to grant Huwaei a role in the U.K.’s 5G networks despite strong pressure against the Chinese supplier from the U.S. The decision puts Johnson in a bind, but it’s the kind of balancing act Britain may have to get used to.

Green Boost | The EU’s industrial strategy, which officials plan to release in March, will give a boost to the use of hydrogen as a fuel by manufacturers and the recycling of products of all kinds. The package of initiatives is aimed at prodding industry and consumers to embrace products and systems that are easier on the environment.

New Polls | Slovenia is on track for its sixth government in 10 years after prime minister — and former TV comedian — Marjan Sarec unexpectedly stepped down over insufficient support in parliament. His resignation underscores the difficulty faced by newcomers from Italy to Ukraine who’ve tapped into popular anger to win power, but struggle to rule.

In Case You Missed It

Gloomy Outlook | German business expectations took a turn for the worse at the start of the year, underscoring the challenges its economy faces in exiting a protracted slowdown. The drop in executives’ outlook was driven by dwindling prospects in services and construction and may dampen policy makers’ hopes for a broader recovery. 

ECB Warning | European Central Bank stimulus has contributed to “very elevated” asset prices that raise the prospect of a sudden market drop, Executive Board member Yves Mersch said in a speech that also warned of the risks to the institution’s credibility.

Bond Party | Markets are cheering Matteo Salvini’s crushing defeat in Sunday’s regional elections in Italy and welcoming Greece’s credit rating upgrade. Yesterday was party day for the euro-area’s bad boys. 

Accession Question | Angela Merkel said she wants an accord with Emmanuel Macron for Albania and North Macedonia to begin EU accession talks at a meeting of the bloc’s leaders in March. The French president vetoed such talks last year, leaving Germany scrambling to revive the countries’ membership hopes and avoid instability in the region. 

EU Hopes | Bosnia-Herzegovina — one of only two splinters from the former Yugoslavia that hasn’t advanced to membership-candidate status with the EU — may meet the criteria by the end of the year, according to Zoran Tegeltija, the head of its new cabinet. But as Misha Savic reports, any attempts to centralize power will only strengthen calls for the country to be split into its ethnically disparate parts.

Chart of the Day

The euro-area economy probably rounded off 2019 with its 27th consecutive quarter of expansion as weakness in Germany began to ebb. Analysts reckon data on Friday will show GDP probably rose 0.2% from the previous three months, underscoring the ECB’s view of “ongoing, but moderate growth.”

Today’s Agenda

All times CET.

• 9 a.m. EU climate chief Frans Timmermans speaks at high-level public conference in Brussels on implementing the European Green Deal. Polish Minister of Climate Michal Kurtyka speaks at the same conference at 11:30 a.m., while EU’s financial services chief Valdis Dombrovskis delivers a speech at 2:30 p.m. 
• 10 a.m. European Parliament President David Sassoli will chair an extraordinary conference of the assembly’s leadership, where Commission President Ursula von der Leyen will present the Commission’s work program to heads of political groups
• 10:35 a.m. European Banking Authority Chairman Jose Manuel Campa speaks at Fintech conference in Paris, where European Securities and Markets Authority Chairman Steven Maijoor also participates
• EU Vice President Vera Jourova meets with Polish Justice Minister and Supreme Court First President in Warsaw
• Von der Leyen and EU economy chief Paolo Gentiloni meet IMF’s Kristalina Georgieva 
• EU digital commissioner Thierry Breton speaks to the European Parliament’s internal market committee 
• Eurostat to release data on trade in services
• EU’s European affairs ministers meet in Brussels to discuss conference on the future of Europe

--With assistance from Nikos Chrysoloras and Michael Winfrey.

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

©2020 Bloomberg L.P.