Crypto News: Brussels Edition: New flexibility in Kyiv

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

Ukraine's allies are starting to detect that Volodymyr Zelenskiy may be getting more flexible about ways to bring Russia's war to an end, we're told. They were aiming to test this sentiment at a meeting hosted by President Joe Biden in Germany this weekend, but he postponed the trip to address hurricane response. Even as Ukraine prepares a roadmap of what it needs to get through the next years, its allies along NATO's eastern flank continue to significantly ramp up their defense spending. In the past year alone, it jumped from $53.2 billion to about $70 billion. The splurge is aimed as much at replacing old Soviet-era gear — much of which was sent to Ukraine — as at boosting military capabilities after decades of underinvestment. Yet it may not be enough: Military officials think it's just a fraction of what's needed.

— Gian Volpicelli

High Spirits | After bracing for China's retaliation over electric-vehicle tariffs, the EU got the reply from Beijing, which said it will start collecting its own tariffs on brandy. China also said it's considering slapping penalties on imported gasoline cars with large engines. European shares slumped amid a possible trade war and the EU said it would take the brandy tariffs to the World Trade Organization.

Rough Numbers | France is struggling with its newfound status as a basket case in the eyes of global investors. Its new government, led by political lifer Michel Barnier, survived a no-confidence vote, but French officials told Brussels that hitting EU deficit limits might take up to five years.

Trump Scenario | Europe's economy could face significantly less growth and more inflation, should Donald Trump win re-election as US president, ECB Governing Council member Joachim Nagel warned. Victory for Trump "could be accompanied by drastic increases in tariffs, an expansionary fiscal policy and severe restrictions on immigration," he said.

Over Steer | President Ursula von der Leyen is still trying to get her new Commission in place, but is already under pressure from her own political party. Just days after succeeding in forcing the Commission to delay rules on tackling deforestation, the center-right European People's Party now wants a revision of the EU's landmark plan to effectively ban the combustion engine in new cars from 2035. Here's why.

Dashed Hopes | The EU's dream to lead in green technologies such as electric vehicles risks being dealt a further blow by the faltering of Northvolt, a Swedish battery maker considered a potential European champion. The company sought bankruptcy protection for one of its units. Read more about why the business is fighting for its survival.

Water Woes | Upmarket French water brand Perrier is facing scrutiny over the fecal contamination of one of its seven wells. The incident triggered the suspension of the well in April and the destruction of more than 2 million iconic pear-shaped bottles. That comes after a regulator's report in 2023, found that illegal pesticides were found in the water where Perrier is sourced.

Billionaire Succession | A Polish self-made billionaire purged his own children from his media and energy empire amid speculations over whether the coup was instigated by his new wife. Investors in Zygmunt Solorz's Warsaw-listed companies are fuming as valuations plummet. On top of that, Solorz's television channels have taken a new direction that some believe could sway next year's presidential election in Poland.

Breaking Point | Romania's government is in disarray after one of the ruling coalition's partners said it would leave the alliance. After the country's top court ruled that a far-right candidate won't be allowed to compete in the presidential elections in November — a move interpreted as a gift to the governing Social Democrats — liberal party leader Nicolae Ciucasa said the political coalition "stops here."

For the first time in decades, German forests have become a source of carbon rather than a sink. A large-scale government survey, which collected data throughout 2022 and was released yesterday, showed that drought, storms and bark beetle infestations have caused so much damage that the nation's forests now release more carbon than they absorb.

All times CET

9 a.m. Hungarian Prime Minister Viktor Orban and Commission President Ursula von der Leyen presents the EU presidency program to the European Parliament in Strasbourg
Ukrainian President Volodymyr Zelenskiy attends summit of southeast European countries in Croatia

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