Blog: A No-Deal Brexit Is Back on the Table – Bloomberg

Welcome to the Brussels Edition, Bloomberg’s daily briefing on what matters most in the heart of the European Union.

The UK’s latest threats to unilaterally suspend the Northern Ireland protocol have not gone down well in Brussels. The EU would likely move quickly to launch infringement procedures against Britain and suspend its trade agreement if Boris Johnson’s government puts forward legislation to revoke its Brexit commitments, we’re told. That would effectively mean returning to the “no deal” scenario that threatened to roil business in the run-up to the UK’s original exit from the bloc. It also marks a rapid souring of relations between the two sides and raises the prospect of a trade war, despite close cooperation in response to Russia’s invasion of Ukraine. Still, the UK has yet to make formal legislative moves, and any retaliation from the EU would need the final backing of all 27 member states. Even then there would be a cooling-off period before quotas, tariffs and other barriers are erected.

John Ainger

What’s Happening

Green Crusade | The Commission is set to bolster renewables and energy-saving goals as part of a 195 billion-euro plan next week to end the EU’s dependency on Russian fossil fuels by 2027. Meanwhile, other green-deal legislation — like reforming the carbon market and phasing out combustion-engine cars — are slowly making their way through the legislative process.

Hungarian Blockade | Hungary continues to disrupt the EU’s plans to impose an oil embargo on Russia. The country said it would only withdraw its veto threat if its imports via pipelines are excluded. EU foreign ministers are scheduled to meet on Monday in Brussels, where they will likely discuss the sanctions plan if a deal isn’t reached before then. Russian billionaires are also fighting the EU’s moves. 

Danish Defense | Denmark’s government is pushing to get the traditionally euro-skeptic Nordic nation to join the EU’s defense cooperation as a result of Russia’s invasion of Ukraine, Foreign Minister Jeppe Kofod told us in an exclusive interview in Copenhagen. The country is the only EU member that doesn’t participate in the bloc’s defense pact but belongs to NATO. 

Tech Talk | The US and EU plan to keep addressing supply-chain and other disruptions as they project a unified front against Russia when the Trade and Technology Council meeting starts Sunday in Paris. In a recent draft of a joint statement we’ve seen, the two sides plan to hail their rejuvenated partnership. 

Masks Off | The EU is formally relaxing its guidance for mask wearing on flights starting next week, although many airlines have already abandoned those rules as Covid-19 concerns ease. The latest rules are likely to be a boost for the industry ahead of the summer season.

In Case You Missed It

Gas Clash | Ukraine and Russia clashed over natural gas sent via pipelines to Europe in a spat that’s disrupting supplies transiting the war-hit country for the first time since the invasion. At the same time, Russia sanctioned a Gazprom unit seized by Germany. The retaliation includes energy supplier Wingas — owner of a section of network connecting Russia to Europe’s largest economy.

Oil Aid | Amid efforts to ban Russian oil, Europe is set to receive three shipments of US Strategic Reserve. Two tankers are en route to Italy and the Netherlands after loading supplies over the past two weeks from terminals linked to reserve storage caverns in Texas and Louisiana, we’ve been told.

Short Hike | ECB policy makers are increasingly embracing a scenario of taking interest rates above zero before the end of the year, we hear. It comes after President Christine Lagarde said a first interest-rate increase in more than a decade may come “weeks” after policy makers conclude net bond-buying.

German Stagflation | The economic omens aren’t good in Germany. The country may already be at the start of a phase combining economic stagnation with rapidly rising consumer prices, according to a senior adviser to Finance Minister Christian Lindner. Need a reminder of exactly what stagflation is?

Europeans Detained | Iranian authorities said they had detained two Europeans for trying to cause “chaos, instability and social disorder,” as a top EU official held talks in Tehran on stalled efforts to revive Iran’s nuclear deal with world powers. The country has been accused in the past of detaining foreigners in order to gain leverage in international disputes.

Me Too | The woman who invented the French equivalent to the MeToo hashtag won a victory at the nation’s top court backing her right to freedom of expression after she denounced inappropriate sexual comments on social media. Sandra Muller accused media specialist Eric Brion in a tweet with the now-famous hashtag #BalanceTonPorc, meaning “expose your pig.”

Chart of the Day

For many of Sweden’s highly indebted consumers, the Riksbank’s sudden interest-rate increase at the end of April marks the start of a new squeeze that officials have long fretted about. Borrowings swelled during the country’s housing boom of the past decade and years of subzero monetary policy. That legacy is now catching up with citizens who were led to believe such a swift change in the central bank’s stance wouldn’t come to pass.

Today’s Agenda

All times CET.

  • 9 a.m. Finnish Foreign Minister Pekka Haavisto appears before European Parliament’s foreign affairs committee
  • 2 p.m. Press conference by Commissioner Adina Valean on measures to facilitate goods transport from Ukraine
  • 3 p.m. German Chancellor Olaf Scholz co-hosts a virtual pandemic summit with US President Joe Biden
  • Commission President Ursula von der Leyen and Council President Charles Michel are at the EU-Japan summit in Tokyo
  • G-7 foreign ministers meet in Berlin

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