Crypto News: Brussels Edition: Defense deficit

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

EU leaders are gathering at the Egmont Palace in Brussels today for an informal retreat dedicated to the future of defense, where they will be joined by NATO's Mark Rutte and the UK's Keir Starmer. The aim is to speak freely and prepare to take some tough decisions. With the war in Ukraine approaching the three-year mark, the bloc needs to find the money and the political will to ramp up its weapons production and strengthen its defense. Starmer will urge his European counterparts to shoulder more of the burden of defending the continent against increased threats from Moscow, according to his office. The common understanding in the EU is that fresh money is needed to bridge the gap before the next budget starts in 2028. Where the funds will come from is a still to be determined and all options are on the table, ranging from joint debt to a greater involvement from the EIB.

— John Ainger and Andrea Palasciano

What's Happening

Tariff Talk | The EU will "respond firmly" if the US imposes tariffs, something Trump has said that he absolutely will do. A commission spokesperson said they regretted the levies that will be imposed on Canada, Mexico and China.

French Budget | The French government will seek to push through its 2025 budget today, exposing it to potential no-confidence votes in a fragmented parliament. Members of far-left parties have already said they will seek to kill the proposed budget. Here's what to watch.

Campaign Pivot | The conservative front-runner in the German election will re-focus his campaign on reviving the struggling economy and moving away from migration. After a bid to outflank an ascendant far-right spectacularly backfired, Friedrich Merz pledged to reduce regulation and slash the country's notorious bureaucracy.

Mobile Youth | The UK is exploring a slimmed-down version of the EU's youth mobility proposal as part of a wider set of discussions seeking closer ties on defense and trade, we've learned. The plan is in the early stages and there's one thing Keir Starmer's government wants to avoid.

Around Europe

Academic Defense | As Germany ramps up spending on its military, a clash is brewing around what some politicians and defense executives say is one of the nation's biggest untapped resources: public universities. So-called civil clauses date back to the Cold War, but now even some academics want to get rid of them.

Easing Up | One of the ECB's more hawkish members, Klaas Knot, believes that inflation is "well on track" to reach the central bank's 2% goal this year, meaning that policymakers can stop restricting economic growth via its interest rates. The ECB last week cut for the fifth time in this cycle. Another such move looks very likely at the next meeting in March.

Belgian Breakthrough | Belgium is no stranger to political deadlock. Appointing its last government took nearly 500 days. By comparison, Friday's breakthrough came quickly, but much uncertainty remains. Not least that its new Prime Minister is a Flemish nationalist.

Serbian Unrest | Protesters shut down bridges over the Danube River in Serbia's Novi Sad to mark three months since a deadly railway station accident and protest against President Aleksandar Vucic. The demonstrations have gathered momentum despite attempts by authorities to defuse tensions, forcing one of his key allies to resign.

Chart of the Day

The collapse of Norway's government this week brings into focus the hundreds of cables transporting electricity across borders in Europe and how they're being transformed into political weapons. A dispute about exports of Norway's cheap power is partly behind the government breakdown.

Today's Agenda

All times CET

9 a.m. EU foreign affairs chief Kaja Kallas speaks at EU Ambassadors Conference 2025
9:30 a.m. EU leaders hold informal retreat in Brussels to discuss defense with NATO Secretary General Rutte and UK Prime Minister Starmer; joint press conference at 4:40 p.m.
Economy Commissioner Valdis Dombrovskis meets AmCham EU CEO Malte Lohan
Defense Commissioner Andrius Kubilius meets Czech Prime Minister Petr Fiala
Justice Commissioner Michael McGrath meets Slovakia's Prime Minister Robert Fico
NATO's Rutte meets Hungarian Prime Minister Viktor Orban in Brussels

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