Brussels Edition: EU climate rethink

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

View in browser

Welcome to the Brussels Edition, Bloomberg's daily briefing on what matters most in the heart of the European Union. Five years after European Commission President Ursula von der Leyen unveiled her landmark green deal, the continent is facing a backlash against climate policy. Wopke Hoekstra, the EU's climate and tax chief, told us that the bloc needs to be ``less one-dimensional'' as it tries to square green goals with efforts to make Europe's industry more competitive. The biggest challenge may be figuring out how to help Europe's ailing automotive sector without losing credibility over fines for carmakers who've missed their emissions-cutting targets. Hoekstra predicts Europe's carmakers will meet the goal of effectively phasing out the combustion engine in new cars by 2035. A quick solution would leave him more time to deal with another thorny issue: convincing the US to back a global tax deal. —John Ainger

What's Happening

Defense Bonds | The EU needs to discuss the option of raising joint debt to finance the spending required to bolster its defenses against Russia, the bloc's top diplomat Kaja Kallas told us. She also said that Ukraine's allies should work toward tightening an oil price cap on Moscow to squeeze a key source of its revenue. Russia Sanctions | The bloc is also considering import restrictions on Russian aluminum and phasing out liquefied natural gas from the nation as part of a new package of sanctions targeting Moscow, we've been told. The draft measures include restrictions on dozens more vessels transporting Russian oil and further export controls on goods for military purposes. The move would also see more banks cut off the international payments systems SWIFT. Syria Transition | EU member states including Germany and France have proposed the suspension of some sanctions on Syria to help ensure a peaceful transition of power after the fall of ex-President Bashar Al-Assad and enable displaced people to return home. Here's what they envisage. Chinese Medicine | An EU probe into China's procurement of medical devices confirmed the bloc's concerns that the Asian country discriminates against foreign firms. That opens the door to measures that may curb Beijing's access to public tenders in the future and risks further raising tensions between the EU and China. Baltic Cable | NATO will deploy a fleet of naval drones to patrol the Baltic Sea, stepping up its response to suspected sabotage attempts of undersea cables linked to Russia's shadow fleet. Earlier the EU's new digital chief, Henna Virkkunen, told us that the repeated damage to undersea cables in the area couldn't be fully accidental.

Around Europe

ECB Resistance | The ECB is is pushing back against investors who reckon firmer inflation, a surprisingly sturdy US jobs market and Donald Trump's economic disruption will narrow the scope to lower interest rates. Budget Bid | French Prime Minister Francois Bayrou may have bought his government some time by offering to renegotiate a contested pension reform in exchange for support from lawmakers to urgently adopt a budget. Spanish Shortage | Prime Minister Pedro Sanchez pitched his long-shot plan to slap a tax of up to 100% on Spanish properties bought by non-residents from outside the EU as a way to fix the country's housing shortage. Read our analysis on why it's likely to fail. Davos Address | Donald Trump will speak virtually in Davos just three days after his inauguration as US president in what is likely to be one of the most closely watched appearances at the World Economic Forum. Over 60 heads of state and government are slated to attend from Jan. 20-24 — and even Elon Musk is invited.

Chart of the Day

Volkswagen had a poor 2024, with sales falling and Europe's biggest automaker even raising the prospect of closing factories in Germany. This year could be even worse. The manufacturer's deliveries risk slumping again because its namesake VW brand doesn't have a new electric car coming in 2025, with key products pushed back amid delays developing software. The problems are starkest in China, where manufacturers led by BYD Co. are dominating with affordable electric and hybrid models. In the US, where President-elect Donald Trump is threatening tariff hikes, VW still doesn't offer any pickup trucks popular among American consumers.

Today's Agenda

All times CET 8:30 a.m. NATO Secretary General Mark Rutte, NATO Military Committee Chair Rob Bauer deliver opening remarks before NATO defense chiefs meet in Brussels Kallas and Trade Commissioner Maros Sefcovic meet Icelandic Foreign Minister Thorgerdur Katrin Gunnarsdottir EU enlargement Commissioner Marta Kos meets EIB President Nadia Calvino and Finnish EU Minister Joakim Strand EU Transport Commissioner Apostolos Tzitzikostas meets Mercedes CEO Ola Kallenius Virkkunen and Commissioner Oliver Varhely give press conference on cybersecurity at hospitals and healthcare providers

Like the Brussels Edition? Don't keep it to yourself. Colleagues and friends can sign up here. How are we doing? We want to hear what you think about this newsletter. Let our Brussels bureau chief know.

Follow Us

Like getting this newsletter? Subscribe to Bloomberg.com for unlimited access to trusted, data-driven journalism and subscriber-only insights. Want to sponsor this newsletter? Get in touch here. You received this message because you are subscribed to Bloomberg's Brussels Edition newsletter. If a friend forwarded you this message, sign up here to get it in your inbox. Unsubscribe Bloomberg.com Contact Us Bloomberg L.P. 731 Lexington Avenue, New York, NY 10022