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Welcome to the Brussels Edition, Bloomberg’s daily briefing on what matters most in the heart of the European Union.
The European Central Bank is primed to follow up on June’s landmark rate cut with another reduction today after a raft of data over the summer pointed to easing inflation and a fragile economic outlook. The latter has become a source of growing concern for some policymakers who’ve warned that borrowing costs mustn’t restrain the economy for longer than necessary. Others are still concerned about stubborn services inflation that could derail a timely return to the 2% price-growth goal if the central bank eases too aggressively. President Christine Lagarde will likely be tight-lipped on any indication of where policy is headed — and whether investor expectations for one or two more cuts this year are accurate.
— John Ainger and Alexander Weber
What’s Happening
EV Revolt | German Chancellor Olaf Scholz joined Spanish Prime Minister Pedro Sanchez in calling on the EU to reconsider a plan to impose additional tariffs on Chinese-made electric vehicles. Volkswagen AG Chairman Hans Dieter Pötsch meantime urged the EU to alter its emissions targets as the German automaker eyes job cuts and unprecedented factory closures in Germany.
Strike Plan | The US and the UK signaled they were open to Ukraine’s request to use western-provided weapons to strike deeper into Russia despite concerns that doing so could further escalate a conflict now in its third year. President Joe Biden will discuss the matter when he meets Prime Minister Keir Starmer in Washington later this week.
Debt Rush | Europe is set to pass the €100 billion mark for September bond sales in record time — two weeks sooner than last year — as borrowers take advantage of lower yields and comparatively calm markets. The prospect of violent price swings as the US November elections approach is encouraging issuers to get their debt sales locked in early.
Mpox Shot | Bavarian Nordic’s smallpox vaccine was moderately effective in preventing mpox infection after a single dose, according to a study in Ontario, Canada, where the shot probably helped curb a 2022 outbreak. Here’s what that means for combatting the disease.
Around Europe
German Shock | Berlin had no advanced warning that UniCredit would swoop in for the shares in Commerzbank it offered up for sale earlier this week, leaving the government scrambling to ensure that the German bank remained focused on lending domestically. Commerzbank is reviewing its defense strategy against a potential takeover bid by its Italian rival that was long in the making.
Avoid Sanctions | Slovak President Peter Pellegrini urged the government to take steps to avoid financial sanctions from the EU. The bloc’s executive arm is weighing a procedure against Slovakia over a suspected erosion of the rule of law, which might halt some of the critical EU subsidies.
Russian Loss | Russia’s National Settlement Depository lost a bid to overturn EU sanctions over its alleged role in helping fund President Vladimir Putin’s invasion of Ukraine. Those €70 billion of assets could now be used to help Kyiv.
Orban Challenge | A new opinion poll showed Peter Magyar’s opposition Tisza movement neck and neck with Hungarian Prime Minister Viktor Orban’s Fidesz party, presenting a growing challenge at home to the EU’s longest-serving leader.
Election Broadside | German Chancellor Olaf Scholz laid into Friedrich Merz during a fiery performance in parliament, accusing the conservative opposition leader of pursuing cheap headlines rather than helping to tackle the problems afflicting Europe’s biggest economy. Here’s what he said in an unusually spirited attack.
Chart of the Day
A Third of Europe’s Major Car Plants at Half Capacity or Less
Auto factories producing passenger vehicles for BMW, Mercedes, Renault, Stellantis and Volkswagen, 2023 datahttps://www.bloomberg.com/toaster/v2/charts/6945a5983b66a6b2ad604710fac05c80.html?brand=business&webTheme=business&web=true&hideTitles=true
Source: Bloomberg News analysis of Just Auto data
Note: A utilization rate of less than 50% is likely loss-making, according to Bloomberg Intelligence. Utilization rates of more than 100% can be achieved with overtime or by increasing the number of shifts. Plants that mostly produce commercial vehicles are excluded.
Volkswagen threatening job cuts in Germany and warning it may shutter factories there for the first time is a reality check for Europe’s anemic auto market that’s set to face more closures. Nearly a third of major passenger-car plants from Europe’s five largest automakers — BMW, Mercedes-Benz, Stellantis, Renault and VW — were underutilized last year, producing fewer than half the vehicles they have the capacity to make, according to a Bloomberg News analysis of Just Auto data. Sites shutting down would add to concerns that the region is facing a protracted downturn after falling behind competitors.
Today’s Agenda
All times CET
- 2:15 p.m. ECB rate decision, followed by news conference by ECB President Christine Lagarde in Frankfurt
- European Parliament panel discusses implementation of the bloc’s Digital Services Act, as well as its approach to Telegram
- EU competition chief Margrethe Vestager delivers keynote speech and participates in a conversation on stage at the Danish Chamber of Commerce in Copenhagen
- EU foreign policy chief Josep Borrell meets Lebanese Prime Minister Najib Mikati in Beirut
- EU agriculture commissioner Janusz Wojciechowski attends G-20 agricultural ministers meeting in Cuiaba, Brazil
- European Stability Mechanism Managing Director Pierre Gramegna speaks at Eurofi conference in Budapest
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— With assistance from Andrea Palasciano