Brussels Edition: Spanish Stalemate, Tariff Reprieve

Viktoria Dendrinou and Charles Penty

(Bloomberg) -- Welcome to the Brussels Edition, Bloomberg’s daily briefing on what matters most in the heart of the European Union. Sign up here to get it in your inbox every weekday morning.

Spaniards head for the polls on Sunday for another general election that again may not change much, or at least not immediately. Acting Prime Minister Pedro Sanchez’s failure to form a government over the summer made a fresh round of voting inevitable, but the outcome may be the same political stalemate as the last ballot held in April. Tensions in Catalonia, the exhumation of the late dictator Francisco Franco and slowing economic growth have all served to sharpen animosities and blunt the chances of compromise. The threat of a barely tolerable fifth election in as many years may, however, concentrate minds. 

What’s Happening

Taxes and Libra | After yesterday’s Eurogroup exposed familiar divisions over banking-market integration, finance ministers will today get a chance to butt heads over zombie taxes on everything from booze to tech giants. They’ll also discuss how to regulate crypto assets like Facebook’s Libra, with a common stance targeted for next month.

Tariff Reprieve | Donald Trump won’t impose duties on European cars next week as threatened, Commission President Jean-Claude Juncker said. “Trump will ruffle a bit, but there will not be any automobile tariffs,” according to Juncker, who is usually right when he’s so categorical. But then Trump isn’t known for his predictability.

Romanian Poll | Romanian President Klaus Iohannis looks to be on course for a second term in power. Voters this weekend will probably reward him for helping put the country’s most powerful politician behind bars for corruption and steering a course back toward the EU’s mainstream. A runoff two weeks later will likely be required to seal his victory.

Eastern Challenges | Shrinking populations, eroding competitiveness, unwise social policies. After three decades of unprecedented advances in incomes and living standards, the EU’s eastern economies that abruptly swapped communism for capitalism when the Berlin Wall fell are facing new challenges.

Week Ahead | EU foreign ministers on Monday will try to put a brave face to the imminent death of the Iran nuclear deal and will probably adopt the legal framework for the imposition of sanctions on Turkey over its drilling activities in the eastern Mediterranean. On Tuesday, defense ministers may seek an accord over the participation of non-EU companies in joint military projects. 

In Case You Missed It

War of Words | Another fissure between Germany and France opened up after French President Emmanuel Macron declared NATO was undergoing “brain death.” Merkel, who happened to be hosting Secretary General Jens Stoltenberg in Berlin yesterday, called Macron’s words “drastic” and NATO “irreplaceable.”

U.K. Latest | The U.K. election campaign is in full swing, with the two main rivals competing on pending pledges, and the Tories are fighting for survival in key battlegrounds. Here’s everything you need to know about Boris Johnson’s latest gamble. 

Data Deals | EU merger watchdogs will take a close look at any deals driven by a desire to combine user data, antitrust chief Margrethe Vestager warned in response to questions about Google’s $2.1 billion bid for smartwatch maker Fitbit. She is considering new rules to rein in how companies collect and use information, calling tech giants “robot vacuum cleaners.” 

Big Spenders | By Christine Lagarde’s own definition, the European Central Bank president’s desire for a government spending boost in the euro area can now focus on a dozen of its members. These are the countries, which, according to the latest EU projections, have space to spend money for stimulus.

Wall Fallout | The world saw German reunification after the fall of the Berlin Wall 30 years ago as a historic success, but for the people of East Germany, it was a different story. Here’s more on how the battle to unify the country still rages.

Chart of the Day

The Commission cut its euro-area growth and inflation outlook amid global trade tensions and policy uncertainty, warning that the bloc’s economic resilience won’t last forever. The EU’s executive arm sees momentum remaining muted through 2021, forecasting an expansion of 1.2% for that year. At 1.3%, inflation is projected to remain well below the ECB’s goal.

Today’s Agenda

All times CET.

8 a.m. EU finance ministers meet in Brussels to discuss climate finance, digital taxation and education  EU education ministers meet in Brussels to discuss lifelong learning, artificial intelligence and debate the importance of education for the economy with their finance counterparts

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--With assistance from Andrew Langley, Nikos Chrysoloras and Alexander Weber.

To contact the authors of this story: Viktoria Dendrinou in Brussels at vdendrinou@bloomberg.netCharles Penty in Madrid at cpenty@bloomberg.net

To contact the editor responsible for this story: Heather Harris at hharris5@bloomberg.net

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