Brussels Edition: EU-UK meetings

EU Commissioners Sefcovic and Dombrovskis are in London today for post-Brexit talks

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Welcome to the Brussels Edition. I'm Suzanne Lynch, Bloomberg's Brussels bureau chief, bringing you the latest from the EU each weekday. Make sure you're signed up. This year will mark the 10-year anniversary of Britain's decision to leave the European Union. A decade on from the 2016 vote, there are signs that EU-UK relations are in a relatively good place. EU Trade Commissioner Maros Sefcovic and Economy Commissioner Valdis Dombrovskis are in London today for a series of meetings as part of the post-Brexit relationship. Dombrovskis is also due to meet senior officials including Chancellor Rachel Reeves and Bank of England Governor Andrew Bailey. Comments from British Prime Minister Keir Starmer over the weekend during his trip to Asia suggest a willingness to reset relations with Brussels. Though Starmer has ruled out forming a new customs union with the EU, work is continuing on the details of a youth mobility scheme and reduction of checks on food and agricultural goods, following a summit last May. Keir Starmer, UK prime minister, during an interview at Downing Street in January. Photographer: Jose Sarmento Matos/Bloomberg But the real focus for further EU-UK collaboration is in the sphere of defense, given that the war in Ukraine will soon enter its fifth year. In a significant intervention, Starmer indicated that the UK will renew its bid to join the EU's flagship €150 billion ($178 billion) defense fund. Negotiations on the UK's participation in the so-called SAFE program broke down last year after Brussels demanded that London pay up to €6.5 billion to join the scheme. "Whether it's SAFE or other initiatives, it makes good sense for Europe in the widest sense of the word — which is the EU plus other European countries — to work more closely together," Starmer told reporters last night. Proponents of UK participation – which would allow Britain to bid for its defense companies to benefit from the fund – have argued that it would be mutually beneficial, boosting the British defense industry while allowing the continent to more quickly increase its military capabilities. But some countries, namely France, have previously been lukewarm about giving non-EU countries access to the scheme. Separately, some countries believe that non-EU nations, such as the UK, should have to pay a fee to participate in the recently-agreed €90 billion loan for Ukraine, Alberto Nardelli and Andrea Palasciano previously reported. The terms and conditions of the UK's participation in EU defense initiatives are likely to dominate discussions ahead of the next EU-UK summit expected early this summer. The Latest The EU is considering a proposal to replace its price cap on Russian oil with a ban on maritime services as part of its latest package of sanctions targeting Moscow for its war against Ukraine, Alberto Nardelli reported. The EU's food safety regulator said almost no amount of the toxin cereulide is considered safe in infant formula, guidance that could prompt further product recalls. The next trilateral meetings between the US, Russia and Ukraine will be held Feb. 4-5 in Abu Dhabi, according to Ukrainian President Volodymyr Zelenskiy. German officials are preparing to push for the EU to discontinue its gas storage targets when they expire in 2027, and instead implement an alternative strategic reserve system that would be managed by individual member states, we have learnt. Hungarian Prime Minister Viktor Orban is looking to reverse an opposition poll lead with the rollout of pre-election spending, much of which will reach voters over the course of February, just two months from a pivotal parliamentary ballot, he said in a Facebook post. Tesla's European sales slump carried over into the new year, with registrations plummeting for battery-electric vehicles in two of the region's leading markets, France and Norway. Seen and Heard on Bloomberg Maxim Timchenko, CEO of DTEK, Ukraine's biggest private energy company, addressed the recent blackouts in Ukraine's biggest cities in an interview with Bloomberg TV. ''We are in a difficult situation, we are at survival mode now," he said, adding that he was grateful to US President Donald Trump for calling on Russian President Vladimir Putin to halt attacks on Kyiv and energy infrastructure for a few days to create favorable conditions for talks. Chart of the Day Italy's credit rating outlook was raised to positive from stable by S&P Global Ratings last week, the latest victory for Prime Minister Giorgia Meloni, as the country "has demonstrated resilience in the face of trade and tariff uncertainty." The longest-serving premier since Silvio Berlusconi exited in 2011, Meloni has overseen an improvement in Italy's fiscal outlook. This has led to a slew of improved credit assessments, with November's move from Moody's Ratings — the first upgrade from that company in more than 23 years — probably the most significant. Coming up No-confidence votes related to budget in French parliament later today Informal EU Competitiveness Council continues tomorrow in Cyprus EU Budget Commissioner Piotr Serafin and Agriculture Commissioner Christoph Hansen visit Dublin tomorrow Final Thought The surge in the euro is set to loom large over the ECB's first policy meeting of the year as the euro-zone inflation is at risk of being pushed further below target by a rally in the common currency, raising uncomfortable questions for officials convening in Frankfurt. While the ECB hasn't changed rates since June and no movement is expected on Thursday, after policymakers last set rates on Dec. 18, there have been attacks on the Federal Reserve, new tariff threats by the US, and most recently, a dramatic slide in the dollar. Like the Brussels Edition? Don't keep it to yourself. Colleagues and friends can sign up here. 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