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Brussels Edition: Not Quite So Popular

Brussels Edition: Not Quite So Popular

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

Trumpism isn’t coming to Europe, at least not anytime soon. Right-wing populists had vowed to turn the EU on its head in these parliamentary elections, but they failed to do much more than hold their ground. Still, the continent’s political landscape is now more fragmented than ever and the pro-EU parties — Christian and Social Democrats, Liberals, and Greens — will need broader coalitions to rule these lands. The first showdown is upon us, as EU leaders gather in Brussels tomorrow to discuss who gets the bloc’s top jobs. Among them, Alexis Tsipras, the biggest loser (along with the U.K. Conservative and Labour parties) of election night.

What’s Happening

U.K. Mess | Brexit wrought more havoc on Britain’s main political parties in European Parliament elections, with both Conservatives and Labour scoring their worst results in decades as voters opted for parties with clear pro- and anti-EU messages. With nearly all the vote counts complete, Nigel Farage’s Brexit Party was in first place, followed by the Liberal Democrats — and then Labour and the Greens. In fifth place were Theresa May’s Conservatives with only 9%, a catastrophic result for the party of government. 

Car Combination | European integration is most definitely in vogue in the auto industry. Fiat Chrysler is poised to announce a tie-up with Renault today that could lead to a full merger of the French and and Italian-American companies, creating the world’s third-biggest automaker. The proposed deal illustrates the intense pressure facing car companies to combine efforts and investments as industry undergoes a painful shift to compete on electric vehicles.

Trump Trade | EU trade ministers meet today in Brussels to weigh good and bad news on the transatlantic front. On the one hand,  Donald Trump has just delayed for six months a decision on imposing much-dreaded tariffs on European cars and components. On the other, his condition for removing the threat of duties altogether appears to be the creation of quotas on European shipments of those goods to the U.S., a move that would violate the World Trade Organization rules the EU is desperately seeking to defend.

Romania Verdict | Romania’s most powerful politician may go to jail if the country’s Supreme Court upholds an initial jail sentence for a corruption offense during a potential final sentencing today. A guilty verdict for ruling Social Democratic party boss Liviu Dragnea may send the governing coalition into a political tailspin amid a clash with the EU over concerns about democratic backsliding and a terrible EU election result.

Kurz Confidence | Conservative Wunderkind Sebastian Kurz faces a no-confidence vote today as the opposition, now including the nationalists he dumped last week, tries to make the recent video scandal stick on him as well as his disgraced deputy. The opposition has the votes to oust him; what’s less clear is whether they can shrug off his narrative that they put the nation’s stability at risk.

In Case You Missed It

Tsipras Loses | Greece’s Prime Minister Alexis Tsipras called snap elections late last night after he suffered a major loss in EU polls. After 4.5 years in power, which started with the tumultuous first half of 2015, the Greek leader failed to win voters’ support despite offering even more handouts the past month and is now expected to lose to the center-right pro-business New Democracy opposition party.

Salvini Surges | Matteo Salvini’s League party became Italy’s biggest political force, scoring a far higher result than in last year’s general elections and in the last EU Parliament vote. But it still fell short of the  knockout blow League officials thought was needed for Salvini to be tempted to pull the plug on the government.

SPD Bruised | Angela Merkel’s junior coalition partner took a beating at the EU polls. Germany’s Social Democrats suffered a sharp drop in the vote and in Bremen for the first time since World War II. The poor showing threatens to revive calls from the party’s base to bring down the government after reluctantly agreeing to enter a third alliance with Merkel 14 months ago.

Le Pen Win | Emmanuel Macron was also among the EU vote’s losers, with Marine Le Pen’s National Rally claiming victory in France. The result is a setback for the French President, who played a more prominent role in the campaign than any other European leader as he sought to mobilize voters. It could undermine his legitimacy as he tries to persuade the rest of the EU to pursue tighter integration.

Belgian Extremes | Belgium bucked the trend and swung to the extremes, as voters in a national election bolstered both the far right and communists, leaving the country with an uphill struggle to form a government. None of the coalitions that have ruled Belgium since the end of World War II would be able to form a majority, with the possible exception of a six-party coalition that ruled from 1999 to 2013: a combination of Socialists, Liberals and ecologists from both sides of the linguistic divide is projected at 76 seats, the narrowest possible majority.

Chart of the Day

Brussels Edition: Not Quite So Popular

The European Parliament said that voter turnout in this year’s EU elections averaged 50.5%. The number is the highest in 20 years and reverses a 35-year decline since the first direct elections to the EU assembly in 1979. Turnout in 2014 was 42.6%.

Today’s Agenda

All times CET.

  • 10 a.m. EU trade ministers meet in Brussels to discuss upcoming talks with the U.S. on cutting industrial tariffs and a lingering American threat to impose duties on European cars and auto parts based on national-security grounds 
  • EU ministers in charge of competition meet in Brussels to discuss potential overhaul of the bloc's industrial/MNA/antitrust rules
  • Eurostat releases data on China-EU trade in goods
  • Bank of Spain releases annual economic report
  • Supreme Court of Romania to issue final verdict for ruling-party chief Dragnea. If justices uphold the initial verdict, he will go to jail
  • Austrian Chancellor Sebastian Kurz faces vote of confidence

--With assistance from Irina Vilcu, Boris Groendahl, Jonathan Stearns, Zoe Schneeweiss and John Martens.

To contact the editor responsible for this story: Heather Harris at hharris5@bloomberg.net, Andrew Blackman

©2019 Bloomberg L.P.