Brussels Edition: Spanish Hour

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Pedro Sanchez faces a vote in Congress today to become Spanish prime minister. Yet it’s still uncertain whether he will muster enough support in the fragmented chamber to form a government and put an end to months of political stalemate. If he fails to garner sufficient backing, as is highly likely, he will have a second chance two days later, when he’ll need fewer votes to be appointed. Spain has been without a stable government since 2015 and has held three elections in four years. 

What’s Happening

U.K. Leadership | U.K.’s Conservative party today announces its new leader, who will also become the country’s prime minister. Boris Johnson, the favorite, will probably find himself facing the same dilemmas that brought about Theresa May’s downfall when he takes over tomorrow.

Trade Vote | French parliamentary votes are usually foregone conclusions, but Emmanuel Macron risks seeing some heavyweight defections within his ruling party when the National Assembly votes today on the EU’s free trade pact with Canada. Enough of his deputies are likely to remain loyal for the measure to pass, but the discord shows the ambivalent view on free trade in France. 

Crunch Time | Italy’s de facto leader, Deputy Premier Matteo Salvini, says the fate of the country’s populist government is “in the hands of the Good Lord.” This week will shed more light on His plans: watch out for Prime Minister Giuseppe Conte’s hearing in Parliament tomorrow about reports League officials solicited money from Russians. Thursday will tell if a long-delayed law granting more powers to regions — a key request of Salvini’s League party — will finally be greenlit. 

Iran Response | EU diplomats will be briefed on the latest from the ever rising tensions in the Gulf today. Between seized vessels, a faltering nuclear deal, a potential oil crisis, and U.S. pressure to escalate, they have a lot to talk about. However, reaching a possible “coordinated response,” as they call it — at least an effective one — has proven difficult in the past.

In Case You Missed It

IAEA Future | Amid the rising tensions with Iran, the International Atomic Energy Agency is now facing an important vacuum. Yukiya Amano, the head of the IAEA, passed away last week, leaving an organization at the center of world events — overseeing Iran nuclear inspections and the clean-up of Fukushima — without a clear path to a new leadership.

Little Consensus | France and Germany widened the group of EU countries willing to accept asylum seekers arriving by boat across the Mediterranean. However, they made no move to accept demands by Salvini that they allow migrant ships to dock in their ports. That, he said, meant that ‘‘Italy must continue to be the refugee camp of Europe.”

Greek Bet | Greece’s new premier, Kyriakos Mitsotakis, got a vote of confidence yesterday over his future plans after three days of parliamentary debate. Now for the hard part: He’ll need to show investors that the country’s first post-bailout government can take bold measures to structurally overhaul the economy and convince crisis-weary Greeks that he can lead them into better times. 

Legal Trouble | U.K. lawyers with lucrative careers in EU law are fighting to save their jobs after the bloc’s top courts warned that a no-deal Brexit would forbid them from representing clients. Attorneys registered in England and Wales and based in London and Brussels have found various workarounds, but so far there’s no one-size-fits-all solution. 

IMF Contenders | European finance ministers struggling to agree on a candidate for the helm of the International Monetary Fund have just over a week left to meet a deadline they’ve set themselves. Catch up on the pros and cons of the main candidates being floated as possible picks — from Dijsselbloem to Rehn.

Chart of the Day

As the European Central Bank prepares to inject more stimulus into the economy, Bloomberg Economics calculates that 7.6% of euro-area activity is directly exposed to trade with the U.K., U.S. and China. Given the scale of these risks and the toll they are already taking on sentiment, it’s unlikely the ECB will wait until they fully materialize before taking action.

Today’s Agenda

All times CET.

10:30 a.m. EU trade chief Cecilia Malmstrom holds hearing with EU lawmakers in Brussels IMF updates its World Economic Outlook Two-day WTO general council begins in Geneva Result of the U.K. Conservative Party leadership vote to be announced French parliament to vote on CETA President Jean-Claude Juncker meets Maltese President George Vella in Valletta Euro-area consumer confidence

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–With assistance from Nikos Chrysoloras, Gregory Viscusi, Alessandro Speciale and Charles Penty.

To contact the authors of this story: Viktoria Dendrinou in Brussels at vdendrinou@bloomberg.netRodrigo Orihuela in Madrid at rorihuela@bloomberg.net

To contact the editor responsible for this story: Zoe Schneeweiss at zschneeweiss@bloomberg.net, Andrew Blackman

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