Brussels Edition: Scalp Hunting, Facebook Police, Boris’s Burden

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

It’s not just Boris Johnson and his Brexit twists and turns or Donald Trump and his tariffs that are preoccupying the EU these days. The body has been gripped by a scalp-hunting drama in its own micro-bubble. The packed hearings of prospective commissioners have seen two candidates sent home and several others asked to come back for further questioning. In the hot seat today will be former Italian premier Paolo Gentiloni, who’ll no doubt face uncomfortable questions from EU lawmakers about how he plans to handle his country’s notoriously strained budget relations with Brussels. And then there’s the Greek nominee and vice-president-designate Margaritis Schinas whose “Protecting our European Way of Life” portfolio has raised more than a few eyebrows.  

— Viktoria Dendrinou

What’s Happening

Boris’s Burden | The next few days will be crucial for Johnson, who yesterday sent the EU his  new Brexit blueprint. If he fails to get an accord, he faces a showdown with Parliament and a court battle.  European Commission President Jean-Claude Juncker said his plan needs more work, while the Irish government said it didn’t look like the basis for a deal. It’s not looking promising.

Content Police | Facebook could be forced to patrol its platform across the world to remove offensive and hateful posts by users in the EU in what could be a landmark privacy ruling today by the bloc’s top court. The social media behemoth has warned that freedom of speech could be at risk if a worldwide obligation to hunt down content is imposed on the company and other technology giants. 

Forex Loans | Polish banks will be looking to the European Court of Justice for a verdict on the power of national courts in dealing with abusive terms of foreign-currency loans to home buyers. For a decade, selling Swiss-franc mortgages to Poles seeking cheaper ways to fund home purchases helped local banks gain customers. But it backfired, triggering a battle over compensating borrowers.

Quiet Polls | Portugal’s general election comes after five years of growth that have seen unemployment halved. Next to the populism and factionalism plaguing neighbors Spain and Italy, the Iberian nation looks like an island of stability. But there’s also a fragility to its success, a nagging sense that Prime Minister Antonio Costa may not have done all he can to prepare the country for a downturn. 

In Case You Missed It

Jet Wars | The WTO gave Trump the go-ahead to impose tariffs on as much as $7.5 billion worth of European exports annually, the most in its history, in retaliation for illegal government aid to Airbus. The ruling is a milestone in the WTO’s longest-running dispute that will further test transatlantic relations, which have deteriorated under Trump’s “America First” strategy. Airbus said U.S. jobs will be threatened if its planes and parts are hit by the tariffs.

Unicorn Barriers | EU policymakers yearn for startups that can kick-start economic growth, yet they haven’t given them the tools they need to share profits with employees. For entrepreneurs and VCs, the problem isn’t just about attracting top talent. The compensation bind may also be why Europe doesn’t produce world-beating tech companies at the same level as the U.S.

Tax Powers | Emmanuel Macron is planning to give tax authorities the power to harvest data from Facebook, Instagram and other social media outlets to help detect fraud. His administration is pushing ahead with the plan to be part of its 2020 budget despite objections of the national privacy regulator, which said the move would raise questions about the government’s use of personal data.

Polish Rates | Poland maintained record-low borrowing costs as conflicting forces inside the central bank were unable to shift interest rates in either direction. Other eastern European countries have been similarly reluctant to tinker with borrowing costs. Despite weakness in nearby Germany, the region’s economies continue to expand rapidly, making rate cuts unnecessary. 

Chart of the Day

Germany’s five leading research institutes slashed forecasts for economic growth, as manufacturers in Europe’s biggest economy struggle with waning global demand and lingering trade disputes. Gross domestic product will expand by 1.1% in 2020, the experts predicted in outlooks published yesterday. In April, they expected growth of 1.8%. Their report forms the basis of the government’s forecasts, due to be updated around the middle of this month.

Today’s Agenda

All times CET.

• 9 a.m. Confirmation hearing of incoming EU economy chief Paolo Gentiloni at the EU Parliament 
• 11 a.m. Eurostat to release euro-area retail trade reading for August
• EU Commission President Jean-Claude Juncker attends a working lunch with EU permanent representatives
• EBF European Banking Summit 
• ECJ  rules in challenge on whether banks can impose abusive clauses on borrowers for local customers of  forex loans 

• ECJ will rule on whether Facebook can be ordered to remove offensive content posted by users in the EU 

• EU trade chief Cecilia Malmström in Stockholm, participates in the ‘EU in a new world order' event

• ECB Vice President Luis de Guindos speaks in Madrid

--With assistance from Zoe Schneeweiss, Joao Lima and Stephanie Bodoni.

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

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