Brussels Edition: Uphill Battle for a Banking Union

(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.

German Finance Minister Olaf Scholz’s push to break the gridlock on EU banking-market integration will get a reality check when he meets euro-area counterparts today in Brussels. Southern European countries will get a chance to express their views on the long list of demands attached to Germany’s compromise proposal on a joint deposit insurance. But even if finalizing the project remains an uphill battle, including within Germany, there’s one thing Scholz has already achieved: After years of talks in obscure working groups, he’s put banking union on the front pages again.

What’s Happening

Economic Outlook | Finance ministers will also take stock of the latest economic forecasts, due to be published by the European Commission today and likely to further downgrade growth projections. Amid timid signs of resilience, and increasingly dire warnings to prepare for the worst, Germany is sticking to its guns that no emergency action to stem the slowdown is needed.

Greek Taxes | Gone are the days when Greece was a permanent item on the agenda of finance ministers’ meetings. The former euro-area problem child is instead focusing on re-branding itself as an investors’ paradise, with the introduction today of an alluring flat tax for wealthy people willing to shift their residence to the Mediterranean country.

Cypriot Passports | Another sunny EU country that sought tax haven status for the wealthy has found itself in the international spotlight for attracting rather shady personalities. Now, Cyprus is beginning the process of revoking the citizenship of some of the “investors” it lured in, including the alleged mastermind of one of the world’s biggest financial scandals.

Turkish Sanctions | Cyprus appears to be succeeding in getting the EU to impose sanctions against Turkey over drilling in the Eastern Mediterranean. The decision may be taken by foreign ministers meeting in Brussels on Monday, unless, among other things, President Recep Tayyip Erdogan convinces Hungarian Prime Minister Viktor Orban to stall the process when they meet in Budapest today.

Car Crunch | The EU’s trade chief sounded oh-so-cautiously optimistic about the bloc avoiding U.S. tariffs on autos — President Donald Trump is expected to make a decision on the matter as soon as next week. “There seem to be very few people defending the idea of tariffs in the car sector,” Cecilia Malmstrom told a European Parliament committee in Brussels yesterday.

In Case You Missed It

U.K. Election | Things keep going wrong for Boris Johnson as he seeks to win a Conservative majority in the U.K.’s Dec. 12 general election. While the Tories have a double-digit lead over the main opposition Labour Party in several recent polls, the negatives are piling up. Here’s why.

New Commission | Following a fair share of slaps by the European Parliament, the new EU executive arm is being filled, after President-elect Ursula von der Leyen picked Adina-Ioana Valean as Romania’s Commissioner-designate. The U.K. is the only country not to nominate a Commissioner, and EU leaders have yet to show any signs they’ll let Boris Johnson get away with that.

Eastern Malaise | A slowdown in global car sales and the threat of U.S. tariffs are curbing economic expansion in eastern Europe, a key manufacturer for the continent’s auto industry, according to the European Bank for Reconstruction and Development. Slovakia, the world’s largest car producer relative to population, suffered the biggest downgrade in the bank’s forecasts, based on its exposure to Germany’s auto giants.

Climate Emergency | More than 11,000 experts from around the world warned “clearly and unequivocally that planet Earth is facing a climate emergency.” Saving ourselves from catastrophe would require a profound transformation of the way we live, consume, eat and move. Is anyone listening? The EU is suggesting it is, with a pledge to push green finance within months.

Chart of the Day

Greece’s bonds are going from strength to strength, and nowhere is that more noticeable than in the yield spread against their peers in Italy. The gap in borrowing costs is tighter than at any point in the past decade, showing investors increasingly see Greece as a safe place to put their money, despite the nation’s lack of an investment-grade rating.

Today’s Agenda

All times CET.

9:30 a.m. The EU’s lower court rules in a challenge by Campine NV against EU fines levied in 2017 against a number of recycling companies for teaming together to push down prices for car batteries 11 a.m. European Commission publishes quarterly economic forecasts 3 p.m. Euro-area finance ministers meet in Brussels EU Competition Commissioner Vestager speaks at Lisbon Web Summit

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–With assistance from John Ainger.

To contact the authors of this story: Nikos Chrysoloras in Brussels at nchrysoloras@bloomberg.netAlexander Weber in Brussels at aweber45@bloomberg.net

To contact the editor responsible for this story: Vidya N Root at vroot@bloomberg.net, Iain Rogers

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