Brussels Edition: Nothing Is Free

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

There’s no such thing as free access. That’s the message prepared by the European Commission for the new British premier in a paper to be presented later this month. The U.K. should expect a “rigorous” assessment of its regulations before its banks will be allowed to do business in the EU after Brexit, according to the draft document. Meanwhile, members of Britain’s Parliament moved to stop the next prime minister forcing the country out of the bloc without an agreement. It’s a clear warning to Boris Johnson, the favorite to succeed Theresa May next week, that he will have a fight on his hands if he tries to deliver a no-deal Brexit. 

What’s Happening

Saving Trade | The EU also has a message for Donald Trump: It’s working with Canada on a solution to preserve the global commercial order in the face of the U.S. president’s onslaught threatening the very existence of the World Trade Organization. Europe’s Donald also made the point that racist remarks are not O.K. 

Italian Instability | Matteo Salvini, Italy’s de facto leader, is doing little to quell talk of a possible snap election as the scandal that has become known as “Russiagate” continues to make headlines. It doesn’t help that his League party is becoming isolated in the country’s ruling coalition after it backed out of an agreement to support Ursula von der Leyen as EU Commission president, raising questions over its right to dictate a key appointment in Brussels.

Spanish Vote | Still in the South, supporters of the Spanish anti-austerity party Podemos refused to endorse Pedro Sanchez’s bid to form a Socialist-led government, dealing a blow to his chances of winning a vote next week that would allow him to stay on as prime minister. On July 22, Parliament will begin a debate on Sanchez’s bid, and if he can’t get through the vote, Spain’s constitutional clock starts the countdown toward a repeat election. 

Target Rethink | ECB staff have begun studying a potential revamp of their inflation goal, in a move that could embolden policy makers to pursue monetary stimulus for longer. A shakeup of the framework would be another step in the ECB’s transformation from a traditional central bank to one adopting innovative strategies for a world where standard economic models no longer seem to work.

In Case You Missed It

Chip Fine | Qualcomm was fined 242 million euros by EU antitrust regulators for deliberately pricing some chips so low they could eliminate a smaller rival. The penalty comes a year after Qualcomm was ordered to pay 997 million euros for thwarting rival suppliers to Apple. Companies have complained about the slow pace of EU antitrust enforcement in fast-moving technology markets.

Cable Clearance | Vodafone won conditional EU approval for its 18.4 billion euro takeover of Liberty Global’s cable assets in Germany and eastern Europe after it assuaged the bloc’s concerns. The deal sees Vodafone scoop up almost a third of Liberty Global and helps it bundle internet, phone and TV services in Germany, its biggest market, in a challenge to former monopoly Deutsche Telekom. 

IMF Vacancy | EU governments want to reach a consensus over the next two weeks on a single candidate to succeed Christine Lagarde atop the IMF. Yet discussions in France this week failed to bring them any closer to agreeing on even a shortlist, let alone one proposal. If the stalemate persists, the bloc will be vulnerable to a challenge to its traditional grip on the job.

Tech Detente | The U.S. and France agreed to push ahead with creating a global digital tax system at a G-7 meeting, papering over a feud on the matter that still has Washington dangling threats of tariffs. Yet whatever common ground was found remains only an incremental step toward resolving differences that threaten to combine with and exacerbate broader transatlantic trade tensions. 

Chart of the Day

The Federal Reserve and other leading central banks are declaring the peak in global interest rates has been reached and are preparing to start the march down. The Bloomberg Economics quarterly review of 23 of the top central banks showed that most are set to cut rates by the end of the year. That’s in stark contrast to three months ago, when the majority were set to hold for the rest of 2019.

Today’s Agenda

• Informal meeting of justice and home affairs ministers in Helsinki
• EU Commission Vice President Jyrki Katainen in Pori, Finland: Attends public debate forum ‘SuomiAreena’  and delivers a keynote speech on the EU’s economic situation and sustainable finance

--With assistance from Paul Gordon.

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

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