Brussels Edition: Rescue Response

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

(Bloomberg) 

Faced with an unprecedented recession, the EU is working overtime to come up with a joint response to complement the extraordinary stimulus already unleashed by national governments and central banks. Its key planks are taking shape and include the euro area’s bailout fund, the European Investment Bank and an EU-wide unemployment reinsurance. But senior finance ministry officials discussing this response today will be faced with a tricky dilemma: are these measures sufficient to deal with the crisis at hand, or is it time to finally leave behind old taboos and put some kind of joint debt issuance on the table?

What’s Happening

Virus Update | A slowdown in the rate of deaths in Spain and Italy continued over the weekend, with Spain registering a fall for the third consecutive day and Italy reporting the lowest single-day coronavirus deaths in over two weeks. In the U.K., Prime Minister Boris Johnson was admitted to hospital after failing to shake off the virus 10 days after being diagnosed.

Defense Debate | EU defense ministers will today discuss how can they maintain the bloc’s military presence abroad as the virus spreads in areas of deployment, and how armies can assist governments in what increasingly looks like a wartime effort. Crucially, ministers will have a first debate about the geopolitical implications of the pandemic, which is changing the shape of our world. 

Insolvency Laws | European governments are ripping up their insolvency laws to stem the tide of companies set to collapse over the Covid-19 pandemic. But for many businesses it may be too little too late, Katie Linsell reports.

Search for a Cure | The huge field of potential treatments represents an almost unparalleled mobilization of medical science. The downside? Pharmaceutical-research experts are raising concerns that attempts to offer desperate coronavirus patients some form of treatment may hobble crucial studies to find drugs that really work.

In Case You Missed It

Airline Refunds | The fight to survive the Covid-19 crisis is pitting airlines against their customers. There’s been conflicting guidance from EU regulators — who insist airlines must offer cash refunds for canceled flights, should passengers ask — and countries that have loosened rules to prevent airlines from collapsing. So the big question is: will you get your money back? 

Privacy Predicament | EU governments have pushed the bloc’s stringent data-privacy rules to their limits by tapping the biggest telecom and tech companies for information to tackle the coronavirus outbreak. Data sharing is helping government officials fight the spread of the illness but also putting privacy experts on edge. 

Italy’s Fate | It may lack the allure of Rome or Venice, but Italy’s economic engine will drive its post-virus recovery. Here’s why the fate of Milan will be the fate of the country.

Keeping Your Religion | Easter, Ramadan and Passover are all celebrated this month, and religious leaders find themselves giving thanks to the internet. With roughly half the world locked down, keeping the communal spirit will be a struggle. But the pandemic, however painfully, has breathed fresh meaning into these holidays, all rooted in hardship and renewal. 

Chart of the Day

Sweden’s experiment has drawn international bewilderment as schools, restaurants and cafes have remained open, and the government relies on the common sense of its citizens to carry the country through the pandemic. But with much of the rest of the world in lockdown, Sweden’s efforts to keep its economy open aren’t doing much to shield it from recession.

Today’s Agenda

All times CET.

  • 10 a.m. Video conference of EU justice ministers
  • Euro Working Group of senior EU finance ministry officials discuss details of bloc’s plan for an economic response to the pandemic
  • Video conference of EU defense ministers to discuss military implications of the Covid-19 pandemic
 
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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.

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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.

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Chart of the Day
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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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