Brussels Edition: Stagflation threat

Low growth and high inflation in Europe still looms despite a ceasefire in Iran ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌

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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. The EU’s top economy official warned today that the bloc still faces the threat of stagflation despite the temporary ceasefire in Iran. Speaking to a committee in the European Parliament, Economy Commissioner Valdis Dombrovskis raised the specter of low growth and higher inflation, predicting that GDP could be 0.6 percentage points lower and inflation as much as 1.5 percentage points higher this year and next. How to respond remains contentious. Following a request by five member states for a tax on the windfall profits that energy companies make due to price spikes, Dombrovskis said the Commission was looking into a more coordinated approach. Such an approach is “currently being assessed” and “remains a possibility,” he told lawmakers. Valdis Dombrovskis speaks to the European Parliament’s committee on economic and monetary affairs. Photographer: Omar Havana/Bloomberg The comments come as countries across Europe grapple with high energy costs. Protests against fuel prices have brought gridlock to cities in Ireland, France has introduced a new loan program for small businesses, while Italy has cut excise duty on fuel. Dombrovskis warned today that any measures, which include taxes on energy, “need to be temporary and targeted.” With France burdened with a persistently high deficit and Italy struggling with debt, any moves that would jeopardize the health of public finances is being closely watched in Brussels. French Finance Minister Roland Lescure said today that the government still intends to keep the deficit within its target of 5% of economic output. Figures on Friday showed that Italy’s budget shortfall reached 3.1% of GDP last year, breaching the EU’s limit. Italian Finance Minister Giancarlo Giorgetti said it was “inevitable” that the EU revises the 3% deficit ceiling on member countries. But asked today, Dombrovskis said that a condition for activating the stability and growth pact’s general escape clause — which allows countries to deviate from the rules — is a “severe economic downturn.” “We are currently not in this scenario,” he said. The Latest The US wants specific commitments from European allies on their pledge to help secure the Strait of Hormuz after the fighting in Iran stops, asking for concrete plans within days. Italian Prime Minister Giorgia Meloni vowed to stay on until the end of her government’s mandate, seeking to stabilize her tenure after a bruising referendum loss last month. Italy should increase its engagement with other nations including China after US President Donald Trump has repeatedly targeted Europe, former Prime Minister Giuseppe Conte told Bloomberg in an interview. In Lithuania, thousands gathered outside parliament in Vilnius yesterday to oppose changes to the public broadcaster law, over concerns that media independence could be in peril. Lufthansa faces a cabin crew strike tomorrow at German airports, threatening to disrupt travel for passengers returning from Easter holidays. Seen and Heard on Bloomberg The Trump administration’s allegations that the EU is targeting US companies when it comes to technology regulation are “inaccurate,” according to European Data Protection Board Chair Anu Talus. European regulators are making decisions “outside of any political pressure,” she told Stephen Carroll in an interview with Bloomberg Radio. “It is not only the US companies the regulators are investigating and focusing on; data protection authorities are equally investigating European companies.” Chart of the Day Bets on a ceasefire between the US and Iran have sent more than $170 million coursing through Polymarket, making it one of the largest geopolitical wagers in the short history of prediction markets. Now, the aftermath is raising the same questions that have dogged the platforms for months: whether bettors are trading on inside information and whether the platforms can cleanly settle the contracts they broker. Coming Up Press conference with European Commission Executive Vice-President Stephane Sejourne and Spanish Economy Minister Carlos Cuerpo this afternoon NATO Secretary General Mark Rutte delivers speech at Reagan Institute in Washington later today French President Emmanuel Macron begins a two-day trip to Italy this evening Final Thought Viktor Orban and US Vice President JD Vance embrace at a pre-election rally in Budapest on April 7. Photographer: Akos Stiller/Bloomberg When US Vice President JD Vance arrived in Budapest this week ahead of Hungary’s election, it was a path well-trodden. French far-right leader Marine Le Pen, her Dutch counterpart and Poland’s president have all visited in an bid to bolster their ally Viktor Orban. The vibe in Hungary suggests that Europe’s longest-serving prime minister needs all the help he can get. Opinion polls show his opponent, Peter Magyar, has a steady double-digit lead in a vote that will have geopolitical ramifications from Washington to Moscow. 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. We’re improving your newsletter experience and we’d love your feedback. If something looks off, help us fine-tune your experience by reporting it here. Follow us 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 |