Thursday, November 30, 2023

Brussels Edition: Regulating AI

Welcome to the Brussels Edition, Bloomberg's daily briefing on what matters most in the heart of the European Union.Today could determine wh

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

Today could determine whether the EU ends up regulating artificial intelligence. The bloc's AI Act, first proposed in 2021, was meant to be wrapped up at the end of this year, but debates over how far to regulate generative AI have threatened to derail the entire legislation. France and Germany argue that proposals from the commission and parliament amount to overregulation that would kill the national startups they hope will one day compete with OpenAI and Google. Today's meeting of deputy ambassadors will determine whether member states give Spain the mandate to negotiate a final deal at the last scheduled trilog next week — or if the act ends up in limbo.

Jillian Deutsch and Natalia Drozdiak

What's Happening

War Fears | Officials and investors are starting to worry that the world is sliding toward a new era of great-power conflict, as the number of flashpoints multiplies from West Africa through Ukraine to the Middle East. For some, the web of overlapping conflagrations carries echoes of the period before World War I.

Trump Trade | Donald Trump hasn't even secured the Republican nomination for the 2024 US election, but the prospect of another Trump term has the EU worried — so much so that the bloc is leaning toward conceding a key issue to President Joe Biden in a dispute over steel imports.

Russian Assets | The EU is moving ahead with a proposal to tax profits from more than €200 billion of frozen Russian central bank assets to aid Ukraine's reconstruction despite concerns from several member nations. The commission tentatively plans to unveil its legislative proposal on Dec. 12.

Mercosur Deal | The EU and South America's biggest economies are closer than ever to concluding a major trade agreement more than two decades in the making, with leaders from both regions optimistic they can strike a deal next week.

Shaky Rating | A year since President Emmanuel Macron was warned that France's credit status faced closer scrutiny, the possibility of a humbling downgrade is looming ever larger. S&P Global ratings has scheduled an update today, almost exactly 12 months after announcing a negative outlook.

Around Europe

Defense Bonds | The EU should consider issuing bonds to boost financing in the defense sector as Russia's war in Ukraine drags on, Council President Charles Michel said yesterday. While it may be difficult to get some member states behind the idea of more joint borrowing after the Covid-19 pandemic, others could be in favor.

EIB Chief | Spanish Economy minister Nadia Calvino is moving closer to becoming the next president of the European Investment Bank and could be confirmed  in the job as early as next week when EU finance ministers meet in Brussels, people familiar with the matter told us.

TikTok Data | TikTok will spend €12 billion over the next decade to create a local data-storage system for European users, part of a larger effort by the Chinese-owned company to reassure policymakers that the video-sharing app is safe.

Lufthansa Deal | Lufthansa formally alerted EU regulators of its intention to buy a 41% stake in Italy's ITA Airways for €325 million, in a deal seen as pivotal to the future of the successor to defunct carrier Alitalia. Italian Premier Giorgia Meloni earlier pressed the commission for a quick approval of the investment.

Swedish Housing | Most Swedish homeowners believe that the price of their dwellings will rise somewhat or remain flat a year from now, according to a survey for state lender SBAB. The survey points to rising optimism after house prices endured a rout in 2022 triggered by higher borrowing costs and elevated inflation.

Chart of the Day

Banks bailed out across Europe more than a decade ago, when the financial crisis and a sovereign debt meltdown wreaked havoc on the industry, are finally being returned to private ownership. The divestments are the latest in a long series stretching from Italy and Greece all the way to Ireland, as higher interest rates lift lenders' profitability and share prices. Governments stand to reap billions of dollars just as a slowing economy tears holes into their budgets. For banks, the divestments could revive consolidation of the bloc's still fragmented market for financial services.

Today's Agenda

All times CET

  • 10:40 a.m.  Bloomberg TV interview with Greek Prime Minister Kyriakos Mitsotakis
  • 10:50 a.m. Bloomberg TV interview with European Green Deal Commissioner Maros Sefcovic
  • 11:30 a.m. Joint statement by European Council President Michel, Commission President Ursula von der Leyen at COP28 in Dubai
  • 2:30 p.m. Michel speech at COP28

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