Germany’s election results came in even closer than expected, with Olaf Scholz of the Social Democrats chalking up a razor-thin advantage over Armin Laschet’s conservatives. Financial markets and mandarins in Brussels alike are hoping that post-Merkel Germany will be less hostile to investment spending, especially for the transition to a low carbon economy, and a bit more enthusiastic about European integration in areas ranging from the banking union to the reform of the EU’s fiscal rules. Drama notwithstanding, that baseline scenario is still possible, through a center-left government led by the Social Democrats. Granted, talks may take months, but investors had priced in a prolonged period of coalition wrangling anyway. By the time those have been wrapped up, we may already be in campaign mode for the French elections - the true risk event for the EU and the continent as a whole. - Nikos Chrysoloras

What’s Happening

Running on Empty | After empty supermarket shelves and surging power costs that led several energy suppliers into bankruptcy, post-Brexit Britain is now facing empty gas stations. A combination of supply-chain disruptions, spiking demand, and a clampdown on migration following the country’s departure from the EU have created the perfect storm for Boris Johnson’s government. 

Tough Transition | Rising energy costs aren’t just a British problem. Skyrocketing demand and dwindling gas supplies have pushed power prices to records across Europe — a crisis that presages trouble for the rest of the planet. The crisis couldn’t have come at a worse time for the EU, as it seeks agreement on tougher climate rules, including the curb of fossil fuel investment and usage. The transition to a low-carbon economy won’t be cheap.

ECB Talks | Surging prices have raised pressure on central banks across the world to hit the brakes on monetary stimulus and put an end to the long era of ultra-cheap money. You will be hearing a lot from the European Central Bank this week, starting today with Christine Lagarde’s hearing at the European Parliament. But the main course is the ECB’s annual conference, which will take place online again starting tomorrow.

Antitrust Battle | It’s the biggest antitrust fine in history, andGoogle will be fighting the European Commission at the EU Court in Luxembourg this week, with 4.3 billion euros at stake. The five-day hearing will examine the EU’s findings against contracts that require Android phone makers to take Google’s search and browser apps and other Google services when they want to license the Play app store. On another enforcement front, EU antitrust chief Margrethe Vestager will be meeting Apple CEO Tim Cook in New York on Friday.

In Case You Missed It

Women Rule | In this weekend’s other election, Iceland elected Europe’s first female-majority legislature in a ballot where the centrist ruling coalition added to its majority after steering the nation through the pandemic. As in Norway, which also held elections this month, concerns over global warming emerged as a campaign theme, yet similarly failed to make a significant dent in the result. 

Czech Election | Next month, it’s the Czechs’ turn to head to the polls. Prime Minister Andrej Babis’s ANO party’s lead narrowed in the latest voting intentions survey. Although ANO would garner most votes, no single party or coalition is likely to win an outright majority in the Oct. 8-9 ballot, according to the survey. 

Macron’s Rivals | French conservative party Les Republicains has opted for a closed primary to pick its candidate for the presidential election in 2022. Conservative candidates include Paris Region head Valerie Pecresse, member of Parliament Eric Ciotti, as well as former Brexit negotiator Michel Barnier. The center-right challenger to take on incumbent president Emmanuel Macron will be elected in early December. 

Same-Sex Marriage | Switzerland is set to allow same-sex couples to marry, 20 years after the Netherlands became the first country to do so. About two-thirds of Swiss voters backed liberalization of the marriage law  in a referendum this weekend. By contrast, a proposal to increase the tax on capital income was rejected.

Big Bailout | A growing group of clubs are warning that a potential 7 billion-euro fund being created by European soccer’s governing body will be used as a bailout for the biggest teams which have racked up the most debt. UEFA is putting the final touches to a rescue package aimed at helping the sport recover from the impact of the pandemic. Here’s the latest. 

Chart of the Day

No one will be happier if you choose to spend Christmas in New York this year than airline executives. After months of relentless beating, the easing of travel restrictions for vaccinated Europeans wishing to visit the U.S. is breathing new life into European airline stocks. But we have seen too many false dawns with Covid-19, and investors are divided on whether the gains -- just like our recently restored freedom to move -- can last.

Today’s Agenda (All times CET)

• 1:45 p.m. ECB’s Christine Lagarde speaks at a European Parliament hearing
• 1:45 p.m. Gert Jan Koopman, the European Commission’s budget director general, testifies before the European Parliament on budget support to Afghanistan and refugees
• Climate chief Frans Timmermans hold EU-China high-level dialogue on climate change with Han Zheng, vice premier-minister of China via videoconference
• Google fights record antitrust fine at EU General Court in Luxembourg
• Commission president Ursula von der Leyen visits Romania to discuss the recovery plan
• Budget commissioner Johannes Hahn participates in event with Austrian chancellor Sebastian Kurz at Salzburg Strategic Summit