Brussels Edition: The German Wallet Creaks Open

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

As the coronavirus outbreak casts fresh doubts over the European recovery, Finance Minister Olaf Scholz’s latest plans could see Germany do something it has long resisted: open a path for limited stimulus. His push to temporarily suspend a constitutionally mandated debt brake in order to provide relief for indebted regions will likely face a tough time in parliament, which would need to approve it by a majority of two-thirds. Still, it was praised by ECB Chief Christine Lagarde and may please officials in Brussels who have been asking Germany to step up investment spending in order to tackle an economic slump.

What’s Happening

Corona Count | The virus is continuing to spread in Europe. Greece confirmed its first case, a 38-year-old woman in the northern city of Thessaloniki, while the number of infections in Italy — the worst-affected nation on the continent — climbed to 400, with 12 deaths. Poland rejected a report that it had its first case, but admitted that it most likely won’t take long before the disease strikes.

Britain’s Turn | Hot on the heels of the publication of the EU mandate for trade talks with the U.K., the British government today publishes its own version. Get ready to see exactly how far apart the two sides are before talks commence on Monday, particularly on the U.K. sticking to European standards.

Turkish Sanctions | EU governments will formally sign off on sanctions against Turkish nationals involved in drilling activities off the coast of Cyprus. While it’s an unprecedented step against a country seeking EU membership, the bloc is holding back from targeting Turkish companies for now.

Driving Improvements | Uber drivers and takeout delivery workers have a new champion in the EU’s antitrust chief, who wants to help them fight for better pay and conditions. In an interview with Bloomberg, Margrethe Vestager says she’s looking at ways to help “people who work in a weak negotiating position” amid concerns about the plight of workers in the so-called gig economy.

ECB Debate | Christine Lagarde has many things on her plate right now — an economic slowdown, a global virus pandemic, and now a heated debate on the ECB’s core aim: inflation. Policymakers are openly divided on whether it should be a fixed target or a range and all the while markets are ramping up pressure on the institution to cut rates.

In Case You Missed It

Germany’s Future | Long-time Angela Merkel antagonist Friedrich Merz kicked off his bid to take over her CDU party — and potentially succeed her as chancellor — with a rousing speech in Thuringia, the region where a rogue decision by local CDU lawmakers to ally with the far right plunged the party into crisis. About 170 miles to the west, a crowd about half the size gathered to hear rival leadership candidate Armin Laschet, a moderate in Merkel’s mold who’s considered the clear front-runner.

Debt Mountain | Italy is living on the edge. That’s the stark assessment from the European Commission, which said that risks to its ability to refinance a mountain of debt in the medium to long term are “high” and that the country is vulnerable to market swings. The coronavirus is also piling on woes in the country’s economic heartland.

Salvini Lockdown | Italy’s right-wing populist opposition leader Matteo Salvini urged the government to earmark at least 10 billion euros for emergency measures to help businesses and families hit by coronavirus. In a Bloomberg interview at his Senate office in Rome, he also said Italy urgently needs to close its ports to migrants arriving from North Africa.

Slovenian Nationalists | Slovenian opposition leader Janez Jansa — a key ally of Hungarian Prime Minister Viktor Orban — won a chance to form a government. He’s set to assemble a new nationalist administration in a region already struggling to control a surge in populism.

Not Just Tariffs | As the EU and the U.K. gear up for trade talks, one thing is becoming increasingly clear: rules and regulations matter just as much as tariffs. Economists at the UN’s Conference on Trade and Development estimate that the burden of both — including things like sanitary regulations — could contribute to a 14% drop in British exports to the bloc.

Carney’s Adventure | When he agreed in 2012 to cross the Atlantic and swap the governorship of the Bank of Canada for that of the Bank of England, Mark Carney declared he was “going to where the challenges are greatest.” Here’s his story atop one of the U.K.’s most important institutions during the Brexit turmoil.

Chart of the Day

London Heathrow airport stepped up its defense of a $20 billion third runway, saying a government decision to block the project would amount to “financial suicide” and hamper U.K. efforts to boost trade after Brexit. Paris Charles de Gaulle airport is already set to take the title of Europe’s busiest hub from Heathrow within two years, Heathrow’s CEO said.

Today’s Agenda

All times CET.

• EU ministers for competitiveness to discuss impact of Green Deal on EU industry
• France’s Macron visits Italy’s Conte in Naples

--With assistance from Zoe Schneeweiss, Nikos Chrysoloras and Ian Wishart.

To contact the editor responsible for this story: Iain Rogers at irogers11@bloomberg.net

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