Brussels Edition: Economic fortunes

ECB policymakers are meeting for their annual forum in Portugal ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌

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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. ECB officials are striking a relatively upbeat tone on the outlook for Europe’s economy at their annual retreat in Sintra, Portugal this week. Kicking off proceedings last night, the central bank’s president, Christine Lagarde, said the region is becoming less vulnerable to external shocks thanks to an improved financial framework and progress on the climate transition, noting it had withstood higher US tariffs and the impact of the Middle East war. The real question occupying investors is what’s next for interest rates. The bank lifted the cost of borrowing by a quarter-point this month, the first hike since 2023, and markets are betting they’ll do so again. In a series of interviews this morning, ECB governing-council members gave some insight into their thinking. Pierre Wunsch, Belgium’s central-bank chief, said the case for the ECB to raise rates for a second time isn’t as clear as it was. The truce between the US and Iran means that the origin of the price shock had “more or less” disappeared. But Dutch council member Olaf Sleijpen said the full extent of the inflation shock from the Iran war isn’t yet fully apparent. “A decline in the oil prices now, of course, is from an inflation point of view definitely good news,” he told Bloomberg TV. “But it remains to be seen what is still in the pipeline.” Data published today could alleviate some of the pressure on the bank to act again. Germany’s annual inflation rate eased more than expected in June, after a report earlier in the day showed a surprisingly sharp decline in French inflation. Italian prices also cooled unexpectedly. The shift is introducing an element of doubt into bets on further rate increases, with traders no longer fully pricing another hike this year. Investor attention will shift tomorrow to Kevin Warsh, who will make his first international appearance since President Donald Trump appointed him last month as chair of the US Federal Reserve. Warsh is due to speak on a panel with Lagarde and the British and Canadian central-bank governors. Aside from hints on monetary policy, the event will be scrutinized for any contrast in chemistry with his predecessor, Jerome Powell. Last year in Sintra, Powell was heaped with praise for standing firm against Trump’s attacks. The Latest The EU and China set an October deadline to make progress on trade disagreements, following a meeting between Trade Commissioner Maros Sefcovic and his Chinese counterpart yesterday. The EU will reserve half of its steel quotas for countries with free-trade deals under new measures meant to protect local industry from mostly Chinese imports. Germany and the Netherlands established a military command center in the Baltic region to deter Russia as part of a broader effort to take on responsibility within NATO ahead of a summit in Ankara next week. Germany’s central bank, the Bundesbank, is vying to oversee the country’s planned state-backed pension fund, set to be one of Europe’s largest pools of long-term capital worth hundreds of billions of euros. Seen and Heard on Bloomberg Speaking in Sintra, ECB Chief Economist Philip Lane told Bloomberg TV that knock-on effects from higher energy prices will take a while to materialize and policymakers won’t lock themselves into a path for interest rates in the meantime. Officials are committed to “not boxing ourselves in” on the trajectory for monetary policy, he added. Chart of the Day Nuclear-reactor company Newcleo is one of nine European startups with a combined value of at least $12.3 billion that have announced plans this year to merge with US-listed SPACs (Special Purpose Acquisition Companies). The Paris-based firm has raised $780 million in private capital since it was founded in 2021 but has yet to turn a profit. So, when Nasdaq-listed acquisition vehicle NewHold Investment Corp. III knocked on the door, it saw an opportunity to list overseas and secure up to $429 million of cash to spend. It illustrates how European firms in critical sectors like nuclear energy and quantum computing are flocking to the US, despite efforts by European authorities and bourses to make the region’s markets more appealing and accessible. Coming up German Foreign Minister Boris Pistorius in Estonia today German Chancellor Friedrich Merz hosts a meeting of top coalition officials tomorrow to discuss its latest reform package European Commission President Ursula von der Leyen in Azerbaijan tomorrow Ireland assumes six-month presidency of the Council of the EU tomorrow Final Thought Thousands of websites are knocked offline every weekend as collateral damage in the Spanish football league’s aggressive campaign against sports piracy – a problem estimated to cost broadcasters and rightsholders globally more than than $28 billion each year. LaLiga, home to Barcelona and Real Madrid, is stepping up efforts to combat websites that illegally stream matches, seeking to protect the revenue it earns from selling broadcast rights. But the technique it’s using, IP blocking, is a blunt tool, and ends up taking out all sorts of other websites, from mom-and-pop shops and travel sites to government agencies and nonprofits. A LaLiga match between Real Madrid and Espanyol at the Santiago Bernabeu stadium in Madrid on April 30, 2022. Photographer: Gabriel Bouys/AFP/Getty Images 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 |