Brussels Edition: The Big Test

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

Ursula von der Leyen may have to wait until the very last minute next week before knowing whether her nomination to become European Commission president is in the bag. After a week-long charm offensive with European Parliament lawmakers, the German conservative can’t say with certainty that she has the assembly’s backing. She still faces sizable opposition in the Socialist faction and a no-vote pledge by the Greens. Little wonder then that the parliament’s leadership is weighing a delay of the vote by a day to July 17 or even, as some are whispering, to September.

What’s Happening

Bank Account | The ECB will today publish a summary of its June 5-6 meeting, potentially providing more insight into concerns about the euro area’s inflation outlook and the decision to extend a pledge to keep interest rates at record lows. ECB President Mario Draghi has since said that he might have to cut rates and that further stimulus may be considered soon, after the commission’s latest economic outlook painted a gloomier picture.

Turkish Balance | EU diplomats continue talks today on punitive measures against Turkey over its drilling activities off the coast of Cyprus, hoping to reach an agreement ahead of a foreign ministers’ meeting. They’ll need to strike a balance between sending a clear message to Ankara and agreeing on measures that won’t harm the interests of EU nations or cut all ties with Turkey.

Brexit Warning | Bank of England Governor Mark Carney will present the latest bi-annual financial stability report, an opportunity for him to signal a heightened sense of alarm at the prospect of a no-deal withdrawal from the EU, as well as other risks facing the U.K. Von der Leyen also weighed in on Brexit, saying she hopes the U.K. will change its mind and stay.

Climate Ambition | Climate change will be in focus today when EU environment ministers gather in Helsinki. Several weeks before a summit called by UN Secretary General Antonio Guterres, they’ll talk about global efforts to limit rising temperatures. Guterres wants countries to make their emission-reduction commitments more ambitious, with a view to reaching climate neutrality by 2050.

In Case You Missed It

Tax Challenge | The U.S. will investigate France’s planned tax on companies like Facebook and Google, which could lead to new tariffs or other trade restrictions. The probe — using the same tool employed to impose tariffs on Chinese goods because of the alleged theft of intellectual property — will look into whether the digital tax would hurt U.S. technology firms, and suggest remedies.

Ailing Merkel | For the third time in less than a month, Angela Merkel had to downplay concerns that health issues could affect her leadership ability at a time when Germany’s economy is losing steam and relations within the governing coalition are strained. Merkel was seen trembling and biting her lip during a ceremony in Berlin yesterday, though she later said she was doing just fine.

No Stress | The European Court of Auditors joined regulators in questioning the value of the EU’s bank stress test, saying last year’s exercise should have been tougher and more consistently applied across the bloc. The test results matter because they help supervisors determine if banks need to increase their capital and what level of dividends and staff bonuses they can pay out.

Iran Escalation | A senior Iranian official  derided EU efforts to salvage the 2015 nuclear deal from a U.S. economic offensive, and said the government’s policy of gradually abandoning some of its commitments under the accord was “unchangeable.” Meanwhile, a top French envoy  was in Tehran to try to convince Iran to reverse steps taken in breach of the deal.

Quiz | This week’s quiz is another one for the cinephiles among you. Which EU government’s permanent representative in Brussels has also been something of a movie star in their home country?

Chart of the Day

The European Commission cut its euro-area  growth and inflation forecasts for next year, with trade tensions and policy uncertainty seen weighing on the region and strengthening Draghi’s case for further stimulus. In its quarterly forecasts, the EU’s executive arm trimmed its GDP projection to 1.4% from 1.5% amid what it said were increased downside risks.

Today’s Agenda

All times CET.

• 9:30 a.m. The EU’s lower court rules on appeals by Huhtamaki, Italmobiliare and others against fines for colluding on prices
• 2:30 p.m. EU General Court rules on bid by Air France to annul a 2014 state aid decision
• 2:30 p.m. EU General Court rules on bid by former Ukraine President Yanukovych to annul 2016 decision to add him to a list of people facing restrictions
• Informal meeting of EU environment ministers in Helsinki
• EU Council President Tusk meets with Georgian Prime Minister Bakhtadze in Batumi, Georgia
• ECB publishes summary of June meeting
• Bank of England Governor Carney presents latest financial stability report
• Slovenian lawmakers may hold second reading of bailout law criticized by ECB

--With assistance from Paul Gordon and Nikos Chrysoloras.

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

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