Brussels Edition: Orban’s Move

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


What to do about Hungary? The EU is still figuring that one out, but there are a few signs that criticism of the country’s alleged descent into authoritarianism could be having an impact. After a rebuke by a group of member states, Prime Minister Viktor Orban is now scrambling to respond to the backlash, amid a pandemic bound to hit the country’s economy. For many in Berlin and Brussels, though, the whole matter is an unwelcome distraction at a time when the viral outbreak is ravaging Europe. And even those who feel they’ve had enough, know that there’s little they can really do other than applying public pressure. The question is whether it will be enough. 

What’s Happening

What’s Next? | As the coronavirus rages across the continent, EU officials are starting to draw up plans for the day after. With the death toll still spiraling upwards and no end in sight to the restrictions that have brought the bloc's economy shuddering to a halt, various proposals are being floated ahead of a finance ministers meeting on Tuesday. At the top of the agenda will be having to make a decision about helping Italy.

Homecoming Hopes | EU foreign ministers today will hold their second video conference in as many weeks as they seek to repatriate more than 200,000 European citizens still stranded abroad as result of the coronavirus pandemic, as well as weigh assistance for the world's weakest nations.

Johnson’s NHS | The cult of Britain's National Health Service has been key to so many political fortunes over the decades, but no other leader has weaponized it more than Boris Johnson after years of austerity measures implemented by his Conservative Party. While peers across Europe come under strain fighting the pandemic, few have more to gain or lose from the ability of the health system to cope than the British prime minister.

Back to Work? | As global infections cross 1 million, companies and governments are trying to strike a balance between confinement and productivity. But, as Bloomberg’s Tara Patel writes, workers remain wary as countries impose strict lockdowns to prevent the spread of Covid-19, while at the same time urging some to return to work to avert a total collapse of the economy.

In Case You Missed It

Where’s Brexit? | Prime Minister Johnson says he won’t delay the U.K.’s final parting with the EU by extending the transition period beyond the end of the year. But empty meeting rooms suggest delay is all but inevitable. Business lobbyists say government officials have canceled most Brexit meetings as civil servants deal with the coronavirus pandemic.

Diesel Claims | Volkswagen AG could face compensation claims over the diesel emissions scandal wherever car owners live, according to an adviser at the bloc’s top court. In an opinion that could pave the way for VW lawsuits across the EU, Advocate General Manuel Campos Sanchez-Bordona of the EU Court of Justice said customers claiming their vehicles lost value shouldn’t have to sue the German carmaker in its own backyard.

Wanting More | Some of Europe’s biggest companies like Iberdrola SA and Volkswagen are urging the European Central Bank to speed up short-term debt purchases to shore up industry liquidity and funding of their daily operations. The ECB last week said it would extend its corporate bond purchases to include non-financial firms’ commercial paper, helping to ensure companies don’t lose access to a vital source of short-term cash for things like payrolls and inventory.

Refugee Ruling | The EU won backing for its refugee policy after the bloc’s top court said Poland, Hungary and the Czech Republic failed to comply with a decision requiring them to resettle refugees in line with national quotas. The European Commission took the three nations to court in 2017 for failing to comply with directives two years earlier requiring EU nations to help relocate migrants who had fled to countries such as Italy and Greece during the biggest influx of asylum seekers to Europe since World War II.

Horror Hospitals | Romania is the one EU member state where hospitals might be as dangerous as the the virus itself. Take a tour of a healthcare system where cancer sufferers with internal bleeding can be accidentally set on fire by an electric scalpel during an operation (true story).

Chart of the Day

Denmark just conducted its biggest currency interventions in over a decade to support the krone, after a wave of market panic caused by the spread of Covid-19 put pressure on the country’s exchange-rate regime. In March, the central bank in Copenhagen bought 64.7 billion kroner, equivalent to $9.4 billion, it said yesterday. The interventions culminated in an interest rate hike on March 19, as Denmark fought to defend the krone’s peg to the euro

Today’s Agenda

All times CET.

  • 11 a.m. Informal video conference of EU foreign affairs ministers
  • 2:15 p.m. European Commission Vice President Valdis Dombrovskis participates in a Facebook live event
  • Eurostat to release retail trade reading for February

A month before Donald Trump launched his election campaign in June 2015, the Law & Justice party swept into power in Poland with a promise to kick out the “elites” and stand up to the EU. This weekend, President Andrzej Duda aims to secure a second term in a vote that not long ago looked like a done deal. But in a warning sign for populists across the EU and the Atlantic, the coronavirus pandemic and its economic fallout are changing the political calculus. Polls show Duda is neck-and-neck against Rafal Trzaskowski, the pro-EU mayor of Warsaw. Poland has much in common with Trump’s America, as the us-against-them rhetoric redrew the electoral landscape in both countries. Sunday's vote will decide whether the nativist remake of the EU's biggest eastern member will continue and may give us a hint about the fate of populism elsewhere in the world.


What’s Happening
Come In |
The euro area is on course to expand, as Croatia and Bulgaria will enter the waiting room for the single currency. A statement from the ECB is expected after markets close today in a move that underscores the euro’s continued allure, despite repeated predictions of its demise.

New Order | Half-way into a year dominated by the pandemic, governments across the globe are confronting a health crisis, an economic crisis and a crisis of institutional legitimacy, all at a time of heightening geopolitical rivalry. How those tectonic shifts crystallize over the next six months could go a long way to determining the post-virus era.

Tech Pressure | Large internet platforms should report acquisitions to the EU, including tiny deals that normally escape merger reviews. In a series of reports published today, a group of experts advising the EU said officials should consider new obligations for platforms to better monitor killer acquisitions designed to preempt future competition.

Week ahead | EU leaders will gather in Brussels next week for their first in-person summit since February to try and strike a deal on a 750-billion euro recovery fund. But despite major pressure to come to an agreement quickly, nations remain deeply divided and diplomats are already looking at possible dates for another meeting, should this one fail. 

Peace Talks | The EU will host a summit aimed at restarting a dialog between Serbia and Kosovo on Sunday in Brussels, adding to signs of renewed momentum in the efforts to resolve the Balkan dispute. The talks come as Serbia saw further unrest and banned large gatherings, while its president denounced violent protests against a plan to reinstate lockdown measures.

In Case You Missed It
Euro Boss |
Paschal Donohoe upset the odds to win the race to become president of the informal but powerful Eurogroup that will help shape the region’s economic recovery. The result was a telling win for small countries, as Donohoe's opponent — Nadia Calvino — enjoyed the backing of the euro area's biggest economies. 

Brexit Snags | The U.K.’s refusal to extend the Brexit transition period will add to obstacles facing virus-hit companies, the EU said as trade talks between the two drag on. The warning came as the bloc granted cross-border access to London’s crucial derivatives market, but cautioned that other swathes of the financial industry have a long way to go to secure post-Brexit agreements.

Trade Chief | The race is on to lead the World Trade Organization out of the worst crisis of its 25-year existence. Priorities for its next leader will be rebuilding the trust and credibility of the organization, rebooting its deadlocked negotiating agenda and restoring its paralyzed dispute-settlement system. Here’s a look at who’s in the running.

Josep Attacks | The EU's top diplomat accused the U.S. of laying waste to the multilateral order in what came across as yet another barely veiled attack on Trump. Josep Borrell has quite a reputation for straight-talking, but the comments highlight a general exasperation across the 27-member bloc at the “America First” agenda. 

WHO's Fault | The World Health Organization named leaders of an independent panel to review its response to the pandemic. The move comes after the body came under fire for its response to the coronavirus outbreak, with Trump pulling the U.S. out of the group and saying that it’s too close to China.


Chart of the Day

Regardless of what the spread of the coronavirus does to demand for risk, market indicators suggest the euro will rise. What’s driving the rally is optimism over the EU’s handling of the virus, including talks of a joint recovery fund, and governments’ relatively swift implementations of lockdowns. That stands in contrast to the pandemic response from across the Atlantic.

Today’s Agenda
All times CET.

  • 10 a.m. EU finance ministers hold a video conference to discuss the economic impact of COVID-19 and recovery measures, capital markets union
  • 11 a.m. Eurostat to release first estimates of EU population in 2019
  • MEPs will vote on the Commission’s Action Plan on how to fight effectively against money laundering and terrorist financing
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