With Europe’s most severe lockdown restrictions lifted, a slew of indicators this week will provide a glimpse of just how the region’s economies are faring. Today’s survey of purchasing managers for the euro area is expected to show an improvement in activity, although what will be most telling is the services industry, which has been hit the hardest by the restrictions. Euro-area consumer confidence is slowly rebounding from a seven-year low, with sentiment clawing back lost ground. The fragile recovery could, however, quickly fade if new coronavirus cases surge — a threat that’s all too real given recent scares in Germany. — Viktoria Dendrinou

What’s Happening

Green Shift | Europe’s Green Deal and recovery plan will be on the table when environment ministers hold a video conference today. Germany may underline the need to link the economic recovery fund to the region’s green goals.

Recovery Diplomacy | The recovery fund is also on the agenda for Emmanuel Macron’s meeting today in The Hague with Dutch Prime Minister Mark Rutte, whose government is demanding changes to the proposal. While the French president may try to talk his hawkish peer into easing his opposition, don't expect a softening of the Dutch stance anytime soon.

Lufthansa Drama | Germany is standing by its 9 billion-euro bailout plan for Lufthansa, daring the airline’s disgruntled top shareholder to shoot it down at a pivotal vote this week. Rejecting the package would lead the airline into uncharted waters, forced to reconfigure its survival plan with cash reserves running low and the threat of insolvency looming.

Trade Rift | Transatlantic relations could hit a new low next month. The EU is readying tariffs on billions of dollars of American exports and taking aim at industries that are politically important for Donald Trump and his Republican allies in an election year.  

Virus Update | Germany’s infection rate rose for a third day, while Bulgaria, one of Europe’s least affected countries, tightens restrictions on public events as new cases spike across the region’s east. In more positive news, the Netherlands reported no new fatalities for the first time since March 12. Here's the latest. 

In Case You Missed It

Chinese Tensions | EU criticism of a Chinese plan to curb Hong Kong’s autonomy, allegations that China spread disinformation about Covid-19 and frustration over Beijing’s curbs on foreign investors featured prominently in talks between the two sides yesterday — a big change from last year, when they pledged to jointly uphold the multilateral order.

New Travel | France plans to ban commercial flights on the country’s shortest domestic routes to prevent low-cost carriers picking up links Air France must abandon under the terms of a bailout package. The move highlights potential ripple effects of environmental strings attached to the rescue of Air France-KLM, which could reshape domestic air travel. 

Slow Progress | The biggest weapon in the arsenal Europe assembled to counter the coronavirus economic collapse has yet to find the target. Less than 15% of funds made available by governments via banks as loan guarantees for business have been extended, according to figures from seven of Europe’s largest economies compiled by Bloomberg News.

Medical Data | As China reported patient zero in Wuhan in December, France was creating a national health data hub that became crucial as the pandemic hit its shores. The data collected by France and other EU peers is a key weapon in Europe’s battle with China and the U.S. for an edge in artificial intelligence — for everything from developing cures to vaccines.

Chart of the Day

Italy’s announcement that it’s considering a cut in sales tax will fuel doubts about the country’s commitment to economic reform just at the moment when its EU allies are trying to persuade skeptics that the country can be trusted with a massive stimulus package. As well as provoking budget hawks from northern EU countries, the prospect of a cut in VAT has already sparked rumblings of dissent within Conte’s divided coalition.

Today’s Agenda

All times CET.

• 9 a.m. EU’s antitrust chief Margrethe Vestager speaks to lawmakers of European Parliament; she also speaks to the World 50 Virtual Global Summit and to the Atlantic Council
• 10 a.m. EU environment ministers hold video conference 
• 3 p.m. EU education ministers hold video conference
• Euro-area flash PMI readings for May 
• Commission Vice President Vera Jourova speaks at a live debate with Brad Smith, president of Microsoft
• German Council of Economic Experts releases economic outlook
• German top civil court hears case brought by country’s antitrust regulator over Facebook tracking how its users’ browse the internet