(Bloomberg) — Welcome to the Brussels Edition, Bloomberg’s daily briefing on what matters most in the heart of the European Union. Sign up here to get it in your inbox every weekday morning.
Five years to the day after the European Central Bank announced massive cash injections to stave off deflation, President Christine Lagarde wants to know why price growth is still so lackluster. Her review, due to to be announced tomorrow, will seek a convincing explanation for why Quantitative Easing, once dubbed the ultimate tool for restoring price stability, hasn’t turned out that way. But at least they don’t have to start from scratch: researchers have already offered some of the likeliest explanations.
What’s Happening
Big Deal | Fresh from a digital tax truce with France and a trade agreement with China, Donald Trump is gearing up for talks with the EU and is hopeful the two can reach a “big trade deal.” Trump’s optimism, together with EU Chief Ursula von der Leyen’s call for focus, could signal an openness to de-escalating tensions.
On the Brink | Five Star leader Luigi di Maio is on the verge of quitting, his credibility shredded by plummeting poll numbers and a rash of defections in parliament. Di Maio’s demise could push Italy toward a snap election with right-wing populist Matteo Salvini preparing to pounce.
Climate Vote | The EU’s goal to become the first climate-neutral continent is headed for a test in June, when governments may vote on a law that would make binding the remit set out in the Green Deal. Political negotiations on the climate law, to be unveiled Feb. 26, will be the first test of the EU’s appetite for toughening the existing 2030 goal.
New Money | Some of the world’s major central banks are teaming up to assess potentially developing their own digital currencies. The effort comes amid questions over whether public authorities risk being left behind as consumers turn to private-sector plans that skirt the traditional banking system.
FTT Future | The future of a levy on financial transactions is in doubt after Austria dismissed a proposal by Germany on how to tax trades in the EU. Without a new a approach, the country said it would leave the group of 10 still working on the plan, potentially scuppering hopes for an accord that’s been in the works since the peak of the financial crisis.
In Case You Missed It
Tax Ruling | The EU got a boost in its crackdown on tax breaks for Spanish companies buying stakes in foreign firms after EU judges said a challenge involving Banco Santander was inadmissible. Any guidance from the bloc’s court could have fed into other appeals by Apple and Amazon as they seek to overturn EU tax orders.
Strange Bedfellows | The co-leader of Germany’s Greens sided with the U.S. in demanding more spending from Berlin, saying that Angela Merkel should drop her balanced-budget “fetishism.” The remarks by Robert Habeck come as Trump, the EU Commission and the IMF have all targeted Germany’s ballooning trade surplus.
Looking Up | Investor confidence in Germany’s growth outlook rose to the highest in more than four years years after easing trade tensions bolstered prospects for industry. The surge in sentiment follows a report by the Bundesbank indicating manufacturing could bottom out at the start of the year.
New Members | Applicants for EU membership hope the bloc will clearly declare that it wants them as members, Serbian President Aleksandar Vucic said. His comments come as setbacks in the enlargement process, notably the rejection of accession talks with North Macedonia and Albania, have thrown hopefuls into doubt
Chart of the Day
China’s pledge to boost imports from the U.S. under a recently signed trade deal could end up costing the EU about $11 billion next year, according to Germany’s Kiel Institute for the World Economy. In a study published this week, the think tank calculated how much spending will likely be allocated to individual trading partners once the agreement kicks in, concluding it’s “very likely” the EU will have to cede some market share.
Today’s Agenda
All times CET.
11:35 a.m. EU Commission President Ursula von der Leyen delivers keynote speech at the World Economic Forum in Davos 2:30 p.m. EU Commission Vice President Věra Jourová speaks at EPC event about the rule of law EU college of Commissioners to discuss Commission contribution to shaping the Conference on the future of Europe EU Council President Charles Michel visits Israel, meets President of Israel Reuven Rivlin France’s Emmanuel Macron travels to Israel
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–With assistance from Ewa Krukowska.
To contact the authors of this story: Viktoria Dendrinou in Brussels at [email protected] Skolimowski in Frankfurt at [email protected]
To contact the editor responsible for this story: Heather Harris at [email protected], Andrew Blackman
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