Brussels Edition: Prelude to a Showdown

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

The 11th-hour deal struck by EU finance ministers two weeks ago left a lot of loose ends  — and Italian Prime Minister Giuseppe Conte’s latest broadside against Germany’s position on joint debt suggests it will take another marathon round of negotiations to tie any of them up. Investors and economists agree that the package of measures Europe has adopted so far, while welcome, are insufficient. Government envoys in Brussels will be briefed today on the latest proposals, including a controversial recovery fund, which Italy, France and others want to be financed by common debt. The meeting (yes, ambassadors in Brussels still meet in person) could give us a sense of whether an unconvincing fudge is the best we can expect from the crunch call between leaders on Thursday. 

What’s Happening

Virus Update | The coronavirus pandemic showed signs of easing in Europe, with the number of new infections slowing in Germany,  and Spain reporting the fewest fatalities in four weeks. The U.K. recorded the lowest number of deaths since April 6, while both cases and fatalities also eased in Italy. Here’s the latest.

German Reopening | Chancellor Angela Merkel’s government is allowing smaller stores to reopen today as part of a gradual loosening of restrictions. The month-long shutdown has deprived German retailers of 30 billion euros in sales and pushed many shops to the brink of bankruptcy. The rest of the continent will be watching.

Brexit Reloaded | Britain and the EU will restart talks today over their future relationship, with time running out to get an agreement after a six-week interruption caused by the coronavirus. Officials say they have made little progress beyond identifying the major areas of disagreement.

Trade Collapse | The Commission predicts  EU trade with the rest of the world will slump by 525 billion euros, or almost 10%, this year as a result of the pandemic. The bloc’s exports of goods and services will drop by 285 billion euros, or 9.2%. We’ll get a Eurostat reading on trade today for February — the last month before lockdowns were imposed. 

Solitary Sweden | Sweden has left its schools, gyms, cafes, bars and restaurants open throughout the spread of the pandemic. And it now says its unusual approach to fighting the coronavirus is starting to yield results. Is it though? 

In Case You Missed It

U.K. Shortages | Amid worsening shortages in long-sleeved disposable gowns, goggles and other protective equipment, British doctors say that they’re being “thrown to the wolves.” The government issued a furious defense of its handling of the crisis and denied reports that the lockdown could start to be lifted in three weeks.

Monetary Action | The European Central Bank could take further action if needed to support the euro area through the coronavirus crisis, policy makers at the institution said. The hints of flexibility in the ECB’s crisis response could help to reassure investors who have begun testing the central bank’s resolve.

Turkish Advance  | While the EU is still preparing the deployment of its naval mission in the Mediterranean, a full-throttled military intervention by Turkey may have turned the tide in Libya’s civil war. It’s a striking development that’s gone largely unnoticed by a world marshalling resources to fight the coronavirus. Here’s why it matters. 

Dead Flowers | The flower trade is a miracle of modern capitalism. But as people everywhere cancel events and the flower orders that went with them, the ripples reach into Dutch auction halls and Kenyan rose fields. Here’s a deep dive into how the $8.5 billion global market for cut flowers is collapsing. 

Simmering Seas | The world’s seas are simmering, with record-high temperatures spurring worry among forecasters that global warming may generate extreme weather this year. Hurricanes, droughts, wildfires and hailstorms are the last things we need right now, but climate change didn’t stop with the virus. Farmers in France already brace for catastrophe. 

Chart of the Day

The coronavirus economy is shredding records for government borrowing and for central-bank lending. Soon it may also smash the taboo that’s supposed to keep those two things apart, Ben Holland reports.

Today’s Agenda

All times CET.

• 9 a.m. EU Parliament Committee on Foreign Affairs hearing with the bloc’s foreign policy chief Josep Borrell on the implications of Covid-19
• 11 a.m. Eurostat to release international trade in goods reading for February
• The European Parliament’s Regional Development Committee will debate with Commission Executive Vice-President Valdis Dombrovskis and Cohesion and Reforms Commissioner Elisa Ferreira on the future of EU cohesion policy
• EU government envoys in Brussels to discuss “roadmap” proposal for exit from the crisis, including potential creation of a recovery fund

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