Brussels isn’t sure whether it should be relieved or deeply troubled by what’s happening in the U.S. On the one hand, the EU has good reasons to expect that Joe Biden, who seems headed for victory (see our latest results here), will help restore the transatlantic alliance. From climate change to global security, Biden appears to be on the same page with Brussels in key policy areas. On other hand, the spectacle of a sitting U.S. president disputing the legitimacy of the election is reminiscent of a failing state rather than the leader of the Western world. The tight outcome and the toxic aftermath of the vote also shows Donald Trump’s politics won’t suddenly disappear, and hopes that a Biden win would reverberate across the world and weaken populist forces within the bloc may prove displaced. Read our analysis of why Trumpism isn’t going away, even if Trump himself leaves office. - Alexander Weber and Nikos Chrysoloras

What’s Happening

Struggling On | A downbeat assessment of the state of Brexit talks when they paused on Wednesday means that progress next week is even more critical. Chief negotiator Michel Barnier plans to head to London on Sunday as round-the-clock discussions resume.

Moving Closer | The EU’s 1.8 trillion-euro budget and recovery plan inched closer to becoming operational after negotiators reached a deal linking funds to the rule of law. While that’s only one step in a broader process and key issues persist, it may lend momentum to talks, especially amid a fast deteriorating economic outlook.

Green Rules | The EU’s rush to finance its recovery from the pandemic means its first-ever green bonds may come before the standards meant to regulate them. The issue underscores the challenges the bloc faces between getting funds to virus-ravaged economies as quickly as possible and aiming to be carbon neutral by 2050.

Virus Update | Greece became the latest European country to declare a national lockdown, making the move on the same day England entered a four-week shutdown to combat the accelerating spread of Covid-19. New cases in Germany, Poland and the Czech Republic climbed to records. Here’s the latest. 

In Case You Missed It

Darker Outlook | The Commission cut the growth outlook for the euro area in light of the new spike in virus infections. The risk that things could get even worse and leave deeper scars through bankruptcies and greater unemployment is still high, it said yesterday. Spain is projected to be the euro area’s worst performing economy this year. 

Dutch Candidate | Frank Elderson, the Dutch supervisory official selected by governments for the European Central Bank’s Executive Board, gave his backing to the institution’s emergency measures in a signal that he won’t start out by rocking the boat. He’s facing a hearing on Monday in the European Parliament, which will also weigh whether to give him a positive opinion despite concerns over the lack of women in finance institutions. 

Italy Warning | Italy could see its government debt spiral out of control next year unless the economy bounces back quickly from a second lockdown, a senior lawmaker from the governing coalition told us in an interview. Luigi Marattin said it’s essential that Italy takes full advantage of the EU aid it’s set to receive.

Exchange Deal | London Stock Exchange Group made concessions to EU regulators examining its $27 billion purchase of data provider Refinitiv, edging a step closer to sealing a deal that will give the firm global scale and growth. The Commission pushed back its deadline to rule on the deal to Jan. 15 after the companies made an offer on Thursday.

Chart of the Day

Freshly battered by coronavirus restrictions, Europe’s economy is facing a sluggish recovery next year that leaves it vulnerable to rising company failures and long-term unemployment. Joblessness in the euro area is set to rise to 8.3% this year and 9.4% in 2021, according to the Commission’s quarterly forecasts. The most dire situation is in Greece and Spain, which will both see rates at almost double the bloc’s average next year.

Today’s Agenda (All times CET)

• 3:15 p.m. ECB’s Robert Holzmann speaks at online conference