EU leaders will discuss the economic outlook and relations with China today after working into the early hours of the morning to salvage an agreement to move ahead on emergency steps to address the energy crisis. The biggest sticking point was the idea of capping gas prices, with Germany worried any such move could limit its ability to buy gas on the open market. But Olaf Scholz ended up yielding to intense pressure to allow the bloc to explore a potential mechanism. The stakes are still high, with governments feeling intense pressure to help tame runaway prices — and avoid the kinds of fractures that would play into the hands of Russian President Vladimir Putin.

— Lyubov Pronina

What's Happening

Energy Tab | As leaders debate, the tab to cushion the economic impact of the energy crisis is climbing rapidly. The Bruegel think tank estimates that, in the last two months, governments have earmarked over half a trillion euros of support for businesses and citizens. But it also highlights how much more Germany is spending than others, which continues to draw ire from other leaders.

ECB Hike | The ECB will act much more forcefully than previously anticipated to rein in record inflation, even as the euro zone succumbs to a recession, according to our survey of economists. Its deposit rate is expected to reach 2.5% by next March, more than the 1.5% foreseen in an earlier poll.

Truss Exit | The UK is once again seeking a new prime minister after Liz Truss stepped down from a term in office that was shorter than her leadership campaign. Her successor will be party’s fifth premier in less than seven years and will have the unenviable task of trying to rebuild a political party that is currently more than 30 points behind the Labour Party. Read about the next steps here.

Polish Prices | Poland is painfully finding out what happens when investors start to fear that policy makers are turning their backs on inflation to keep the economy humming for next year’s election. Its government bond yields are rising faster than anywhere else in the world and the selloff accelerated after a surprise central bank decision to keep rates unchanged despite surging inflation.

Bulgarian Deadlock | Bulgarian lawmakers failed to elect a speaker in parliament, creating an unprecedented deadlock. Until it’s resolved, lawmakers won’t be able to proceed with business including legislation to access EU funds, euro adoption and the purchase of F-16 fighter jets. In addition, President Rumen Radev can’t start consultations to create a cabinet.

In Case You Missed It

Bonus Gap | A Paris court criticized BNP Paribas for only using women’s base salary as a comparison with the median for men in the same jobs, while excluding the bonuses. The impact of the ruling may be felt across the banking system in France as other large lenders focus solely on base salaries in their efforts to close the gender pay gap.

Chip Wars | When the US government announced sweeping restrictions this month to cut China off from producing cutting edge semiconductors, ASML, Europe’s most important tech company, was spared. But pressure from Washington for Europe to follow its lead will only intensify.

Belarus Buildup | As many as 9,000 Russian servicemen and almost 170 battle tanks, 200 armored personnel carriers, artillery and aircraft are arriving in Belarus as part of a “joint force” deployed in the nation bordering Ukraine to the north. They’re due to carry out live fire and missile drills in eastern and central Belarus. Read our rolling Ukraine coverage here.

Access Denied | The International Atomic Energy Agency confirmed yesterday that executives from Rosatom and Russia’s industry regulator were dropped from the agenda of next week’s nuclear summit in Washtington. White House officials have been considering for months ways to reduce the Kremlin’s influence on global nuclear markets, where Rosatom continues to be the biggest exporter of nuclear fuel and reactors. 

Chart of the Day

Supply shortages have lifted oil prices by $30 since December 2021, taking the cost of a barrel to near $90. How will this affect the world’s biggest economies? Bloomberg Economics estimates the drag on growth ranges from near zero in the US, to 0.2 percentage point in China, and 0.8 percentage point in the euro area. Amped up US oil production and reduced energy intensity of output globally mean the drag from rising prices is smaller than in the past.

Today's Agenda

• 1 p.m. German Foreign Minister Annalena Baerbock hosts a conference on the Western Balkans in Berlin
• EU leaders summit continues in Brussels
• Transport ministers meet in Prague
• Commission Vice President Valdis Dombrovskis participates in the Riga Conference 2022 debate
• Home Affairs Commissioner Ylva Johansson gives an address at the 7th European Migration Forum