Once again, Europe has become an epicenter of the pandemic, with cases surging to 78 million. According to the World Health Organization, that’s more infections than several other regions combined. Last week, Europe and Central Asia accounted for almost half of the world’s reported covid deaths. The outbreak has accelerated in Europe over the last four weeks as colder temperatures lead to more socializing indoors. While some countries have recently tightened restrictions, most governments are loathe to consider any return to lockdowns, meaning another dire winter may be ahead. ‘’If we stay on this trajectory, we could see another half a million Covid-19 deaths in Europe and Central Asia by February,” warned Hans Kluge, the WHO’s regional director for Europe.
--Lyubov Pronina
What’s Happening
Brexit talks | U.K. Brexit Minister David Frost meets his EU counterpart Maros Sefcovic in Brussels today as talks on post-Brexit fishing licenses continue between the U.K., France, EU and Channel Islands. France’s EU affairs minister, Clement Beaune, praised the latest round of talks with Frost yesterday, but a solution to the dispute has yet to be found.
Sustainable taxonomy | China and the EU have agreed upon a common classification system that market participants can use to issue green finance products. The agreement covers energy, manufacturing, construction, solid waste and forestry.
Snap Vote | Portuguese Prime Minister Antonio Costa will face an early election on Jan. 30 after parliament rejected his minority Socialist government’s budget. Costa, who is halfway through a second four-year term, is heading for the vote with a lead in opinion polls over the biggest opposition group, the center-right PSD party. If victorious, he's likely to preside over another minority cabinet governing a recovering economy.
Digital euro | Euro area finance ministers will on Monday discuss creating a digital euro. The Eurogroup will assess the potential impact of the virtual currency on the financial sector, and what role banks could play in its rollout later this decade. Ministers will also take stock of the economic recovery that’s losing momentum, with disagreement likely to continue over a fiscal rules review.
German finance| As negotiators from three parties labor to forge a new German government, a consensus is emerging that Christian Lindner from the pro-business Free Democrats will get the finance ministry post. Lindner is considered a proponent of the economic movement known as ordoliberalism, whose followers oppose state intervention and reject the use of expansionary fiscal and monetary policies to counteract downturns.
OECD inflation | The global surge in energy prices pushed inflation in the OECD area to 4.6% in September, the highest rate since 2008. The report on the 38-member group adds pressure on major central banks that have said the situation is largely transitory and have shied from any sudden tightening of policy to contain prices.
In Case You Missed It
Czech hike | The Czech Republic raised borrowing costs more than expected, accelerating the EU’s most aggressive campaign of rate hikes as fears of runaway inflation overshadow a looming economic slowdown. The central bank lifted its key rate by 125 basis points to 2.75% on Thursday in the biggest move in nearly a quarter century.
Funding coal | More than 20 countries including Canada and the U.S. have pledged to stop funding foreign fossil fuel projects by end of 2022, potentially shifting more than $15 billion of public funds a year. But holdouts such as China undermine the impact.
Poland’s growth | Poland’s clash with the EU over democratic standards must end soon to ensure sustained economic growth in the near term, according to European Bank for Reconstruction and Development Chief Economist Beata Javorcik. With the European Commission having frozen approval of 36 billion euros in pandemic aid, she said the growth forecast for the EU’s largest eastern member is subject to “big uncertainty.”
ESG red tape | Asset managers in the U.K. may be facing more rules on classifying ESG investments than their EU peers, creating extra red tape for firms doing business in both jurisdictions. The U.K.’s initial proposal for labeling ESG products includes five categories, compared with three in the EU.
Airbus deliveries | Airbus delivered about 35 planes in October, sources told us said ahead of monthly results to be published today. That compares with 40 in September. The slowdown is a step in the wrong direction for the European planemaker, which is pushing an ambitious production ramp-up.
Chart of the Day
One in four German business leaders say that there are circumstances where physical violence against a partner is justified, according to a survey conducted in July and August by YouGov and Frontline100, a Germany-based anti-domestic-violence organization. The figures underscore how Germany often lags behind other nations in acknowledging inequities faced by vulnerable groups, such as women and minorities. German women’s attitudes on the subject point to a deeper issue: nearly 20% of women — more than in any other country in Europe — said a husband is justified in hitting or beating his wife, according to an OECD report in 2019.
Today’s Agenda
- Commission president Ursula von der Leyen and climate chief Frans Timmermans meet delegation of U.S. lawmakers
- Foreign policy chief Josep Borrell visits Brazil