Brussels Edition: Scholz and Merz court Davos

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

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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 Donald Trump set to rattle transatlantic relations after being sworn in to a second term yesterday, the contest to lead Europe's biggest economy is heating up. Germany's Social Democrat Chancellor Olaf Scholz and his rival in the Feb. 23 election, Christian Democrat Friedrich Merz, are bringing their campaigns to the World Economic Forum in Davos — pitching their visions today to the global elite attending the summit in the Swiss Alps. Merz plans to present his pro-business tax cuts while the chancellor, lagging in opinion polls, will defend his debt-financed investment boost as he fights an uphill battle to salvage his fortunes.  — Michal Kubala

What's Happening

Act Urgently | Europe needs to accelerate efforts to boost its competitiveness and act urgently to implement the Draghi report, said Paschal Donohoe, the head of Eurogroup, saying the bloc should make headway on projects like the capital markets union — and adding that Europe may yet be a "very good ally" to Trump.  Caution on Trump | EU finance chiefs warned against rushing into retaliatory measures in response to Donald Trump's tariff threats, urging constructive dialogue over escalation, especially since it's not yet clear what measures the US president will take. Trump yesterday reiterated a call for the EU to buy more American oil and gas if the bloc wants to avoid tariffs. Strained Relations | Slovak Prime Minister Robert Fico suggested rapid global shifts could one day make the EU and NATO obsolete. While he's not ditching the eastern European nation's key partners just yet, the premier's relationship with the west is undergoing a stress test, strained particularly by his visit to Moscow and his ramped-up criticism of Ukrainian President Volodymyr Zelenskiy, the EU and NATO.  Wake-Up Call | Overly restrictive regulations put European banks at risk of falling behind their peers, BlackRock Vice Chairman Philipp Hildebrand told us in Davos. The former Swiss central bank chief said Europe's financial industry needs a "wake-up call on regulation" in order to remain competitive and shared his worry about "stubbornly sticky" inflation.

Around Europe

Open to Talk | Vladimir Putin said he's open to dialogue with the US on Ukraine as he offered congratulations to President Donald Trump yesterday. The Russian leader said any potential talks should result in "long-term peace" as opposed to a "short truce."  Stagnating Sales | European car sales barely grew last year as persistent inflation, higher borrowing costs and apathy toward electric models led consumers to hold off on buying vehicles. Unionist Bid | The British government rejected a bid by Northern Ireland unionist parties to use the "Stormont Brake" to stop certain EU laws. EU rules still apply to Northern Ireland but the Unionists — who favor stronger ties with the rest of the UK — argue against their impact on the economy. The government said the requirements for the brake have not been fulfilled.  Orban's Dubai | Hungary sold land to Abu Dhabi-based developer Eagle Hills, paving the way for the construction of the biggest buildings in the EU. The prestige project will replace a neglected rail station near central Budapest with towers taller than the Empire State Building — earning the nickname "mini-Dubai." The opposition is criticizing the government for not backing more affordable housing instead.  Cheaper Yachts | The market for superyachts is quieting down — a trend that may continue according to a report published by Monaco Yacht Show. That's why famous yachts like the 162-foot all-carbon Khalilah are getting their prices knocked off. Read why it can't seem to find a buyer.

Chart of the Day

Telefonica trails some European carriers on spending. It was the worst performer on Spain's main stock index yesterday after Spanish Prime Minister Pedro Sanchez replaced Chairman and CEO Jose Maria Alvarez-Pallete with Marc Murtra, who is close to Sanchez and served in a previous Socialist administration. The leadership reshuffle could result in efforts to increase earnings in Telefonica's main market in Spain, while hastening the company's exit from the Latin American market. Yet worries persist over Murtra's inexperience in the telecom sector.

Today's Agenda

All times CET EU finance ministers meet in Brussels 9 a.m. European Parliament debates need to enforce digital laws with respect to social media platforms in Strasbourg 10:50 a.m. Commission President Ursula von der Leyen holds speech at World Economic Forum in Davos, Switzerland 1 p.m. European Parliament debates implications of Donald Trump presidency in Strasbourg Informal meeting of EU education ministers in Warsaw

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