Brussels Edition: Meloni Gambles on Trump and Musk Ties

With less than two weeks to go before Donald Trump returns to the White House, many EU officials are still struggling to build communication channels to the incoming administration.

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Welcome to the Brussels Edition, Bloomberg's daily briefing on what matters most in the heart of the European Union. With less than two weeks to go before Donald Trump returns to the White House, many EU officials are still struggling to open channels of communication to the incoming administration. Not Giorgia Meloni. Italy's prime minister has an inside track to Trump thanks to Elon Musk, which she put to use over the weekend by visiting the president-elect at Mar-a-Lago. Meloni is well placed to be Europe's point person to the US, but that position is loaded with risk — especially given the unpredictable personalities involved. As the world's richest man, Musk continues to rock European politics by backing far-right parties in the UK and Germany — and sitting for an interview with Alternative for Germany leader Alice Weidel on X, which the European Commission will watch closely — Meloni must be careful not to get burned.  — Saim Saeed

What's Happening

Losing Out | The German government insists it will become a semiconductor superpower, but that vision looks increasingly hopeless. Intel decided to halt a €30 billion investment in the city of Magdeburg — and other manufacturers have rolled back expansion plans or relocated factories elsewhere. Polls indicate that voters will punish the Social Democratic-led coalition to being unable secure the fortunes of Europe's biggest economy.  Revised Target | France's new finance minister, Eric Lombard, set out a slower pace of deficit reduction compared with the previous government, proposing to cut the deficit to between 5% and 5.5%. He did so partly to avoid the fate that administration's collapse. Finding a fiscal path that is acceptable to parliament is a matter of survival for Lombard and Prime Minister Francois Bayrou.  Fading Momentum | With the EU prioritizing industry, some advocacy groups fret that the bloc will shift focus away from curbing tax avoidance. Conversations about how best to stop tax dodgers are currently stuck, and the commission has said little about future plans. "If the commission is committed to doing more on stopping tax avoidance, they haven't told us how yet," Tove Maria Ryding of the European Network on Debt and Development told us.  Gas Alternatives | A meeting between Slovakia and Ukraine to discuss the transit of gas through Ukraine was canceled after Ukrainian officials were unable to attend. The commission, which convened the meeting to find a way forward after flows were halted at the start of the year, will look for alternative dates. Russia is seeking to replace lost revenue by expanding exports of liquefied natural gas, including to the EU, while routing pipeline gas to other buyers like China.

Around Europe

Burning Fuel | Europe is burning through gas reserves more quickly than at any point in the last seven years as cold weather ramps up. The region's vast underground storage sites — which act as a buffer against tighter flows — are just over 70% full compared to about 86% a year ago. Temperatures have dropped across most of northwest Europe, which could spur further withdrawals in coming days.  Higher Prices | German inflation accelerated more than anticipated, boosting the ECB's plans to gradually cut interest rates. Consumer prices rose 2.9% from a year ago in December, up from 2.4% in the previous month. Factors including an increase in the cost of the nationwide public-transport ticket and a higher national carbon price are set to keep inflation pressures high before snap elections next month. Euro-zone data are due today.  Northern Exposure | Donald Trump Jr. will travel to Greenland this week in a surprise visit to the Arctic territory, just weeks after his father rekindled the idea of buying the island from Denmark. A delegation arrived in the capital Nuuk on Monday, and Trump Jr. himself will land on Tuesday, the head of Greenland's Department of Foreign Affairs, Mininnguaq Kleist, told Bloomberg News.  Sarkozy Trial | Nicolas Sarkozy is at the center of a corruption trial over allegations that he covertly received about €5 million in cash and offshore transfers from aides to former Libyan dictator Moammar Qaddafi. The former French president, who denies any wrongdoing, was convicted in a separate corruption case in December.  Simpler Reactors | French state-owned utility EDF is simplifying the design of its small modular nuclear reactors to replace coal-fired power plants. The company aims to finalize the designs by mid-2026 and prepare a product for market in the next decade. EDF ditched a complex design six months ago amid competition from Rolls Royce and Hitachi.

Chart of the Day

The UK has replaced Germany as the largest European market for electric vehicles. The UK's 21% surge comes on the heels of an EV sales mandate, while Germany can attribute a 25% dip in registrations last year to the removal of purchasing incentives and increased competition from China. Registrations also suffered as manufacturers waited to launch new models to comply with new EU regulations that come into effect this year.

Today's Agenda

Trade Commissioner Maros Sefcovic meets WTO Director General Ngozi Okonjo-Iweala in Geneva, Switzerland Financial Services Commissioner Maria Luis Albuquerque participates in a debate organized by the Portuguese Foreign Affairs Office in Lisbon, Portgual

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