← Brussels Playbook Podcast
Brussels Playbook Podcast
Berlin turns up the heat
00:15:32
Europe is staring down a familiar and unwelcome set of circumstances: rising energy prices, slowing growth and growing political pressure.
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- [00:02]
A
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- [00:28]
B
Good morning. It's Monday, 27th of April, and this is the Brussels Playbook podcast. The vibe in Brussels today is nightmarish as Europe braces for the economic and political aftershocks of the Iran conflict. And also on the pod, Berlin has a message to Ursula, cut the red tape or else. Plus, there's a plan to revitalize bricks and mortar retail in Brussels, which means shops are going to stay open later and also on Sundays. Hey, it's me, Zohar, Chef de loet. I'm back from Australia. Yay. I've had a couple of weeks off and I'm back today. Nick Vinnicker is with me today, too. Nick, before we get into all of the stuff that we need to talk about today, first off, let's start briefly in Washington, where there was a shooting over the weekend at the White House Correspondents Dinner. And you were there last year, weren't you?
- [01:26]
C
I was there. And that's what makes it sort of very weird and very close. I mean, this is the big politics and media rendezvous of the year in D.C. it's a mix of journalists, politicians, a bit of humor. Not the year I was there because it was boycotted by the president and the comics. But this year, Donald Trump, Melania Trump, Vice President J.D. vance, all turned out and were in the room when this happened, which really kind of changes the atmosphere completely around this event.
- [01:51]
B
Yeah, totally. And what we heard happened was that there was a shooter who attempted to gain entry to the event. He was stopped nowhere near them. That's the important thing, right, Nick?
- [02:00]
C
It was the floor above. The ballroom is underground effectively. And the person was stopped on on the kind of lobby of the hotel where it usually takes place.
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B
Anyway, look, it was a pretty shocking event. Condemnation poured in from all around the eu. The European Commission President Ursula von der Leyen said violence has no place in politics. Antonio Kosta called it deeply unsettling. And reactions from other politicians as well. Hopefully everyone who was involved is, is safe and I think they are indeed.
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C
And the event is supposed to be rescheduled within less than a month's time because Trump has this speech that he really wants to give. Skewering the media.
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B
Right, Nick, let's get to our first story today. You've just come back from Greece where you were attending the Delphi Economic Forum. Loads of big conversations happening there and we'll get back to some of those later. But first up, let's go to Athens, where the EU's deputy finance ministers are gathering today.
- [02:57]
C
Right, so this is some follow up from the last week's Yuko where leaders were looking at the fallout from the Iran war, the energy crisis. The deputy finance ministers are being asked to follow up on some of that work and see what they can do to avoid a debt crisis. Because the situation all these leaders are in is that they have high deficits and high debt loads left over from the COVID crisis and now they're having to cushion the blow from this energy crisis with very limited means to do that.
- [03:25]
B
Yeah, and this is something that's really alarming capitals around Europe and in fact around the world, because we're seeing this term coming back to haunt us Stagflation, which is basically where you've got a bunch of stagnating economies. But if you pump money in to try to stimulate them, inflation will go up. And people are already dealing with inflation. And that's something that really has been felt. I mean, I'm feeling it myself, I'm sure our listeners are feeling it too. But prices at the shops are going up, petrol prices are going up, everything seems to be more expensive. But people are not really feeling a kind of benefit from, you know, higher economic gains from, you know, higher salaries, et cetera. So it's very, very dangerous. And we've seen the Commission warn capitals that they shouldn't indiscriminately just pump money into subsidies for things like energy, because the concern is that that will just have the opposite effect of what is intended and increase inflation. So that's a real worry. And this has people really concerned Germany and Italy. They're downloading their growth forecasts. You have also spoken to, actually the EU's economy commissioner, Valdosta Brovskas, who was in Delphi, and he sounded pretty worried.
- [04:35]
C
Yeah, I mean, he was sort of pretty frank about it. He said, you know, we are in this stagflation crisis. It's not so much something that we are worried about, it's, it's now happening. And the tools we had, like you were saying, are, are really limited. He said, do expect the EU to downgrade its full year growth forecast. The growth is not spectacular to begin with, but now it's going to get slashed even more. And he also said, you know, this started as an energy crisis, high fuel prices. Now it's spreading across the economy into different parts. So you talked about, you know, stimulation and a lot of cash. These governments simply don't have enough money. They don't have the means to do this. And we can see the policymakers holding their fire. We're not going to do big stimulus efforts to push more money into the economy because effectively, we don't have the margins to do that. So they're really stuck. And of course, the blowback is political and there's a risk for leaders, and
- [05:29]
B
the risk is that you've got various parties, the far left, far right parties across Europe really picking up votes. And there's this key election in France in the summer of 2027. That's the presidential election. Emmanuel Macron cannot run in that election because he's capped in his terms. And so there is a real expectation that Marine Le Pen's far right national rally may actually come to power. Whether that's with Le Pen as the president or with Jordan Bardella, who is her kind of stand in, should she not be able to run. It is a real fear. And the idea behind some of these measures that Tom Braskas is talking about is to kind of cut some of the oxygen out of that rising far right.
- [06:13]
C
Yep. We also have a big state election coming up in Germany in September in Saxony anhalt, where the AfD is poised to make big gains. So, you know, we kind of had lost that sort of populist alert, and now it's really coming back into the fore. I caught up with the head of the European Economic and Social Committee, who's sort of tracking the mood, and he says the problem with this is that it's really affecting day to day people, regular people. It's digging into pocketbooks he called an income shock. And of course, that's something that feeds right into the ballot box.
- [06:44]
B
Yeah. And so we're already seeing these concerns rising around the eu. There's going to be a few sessions at the European Parliament's voting plenary in Strasbourg this week where they're going to talk about this. There's this big debate on the next EU budget in the plenary tomorrow, and that's going to be setting out Parliament's position, and likely that's going to reopen that frugal versus spenders divide.
- [07:07]
C
Absolutely. What this does is that it exacerbates all the tensions in the EU between North and south and the big debate is, do we continue to fund this big defense rearmament or do we need to use whatever means we have to shield the economies in the southern states are, you know, slamming on the brakes and saying, no, no, no, we need to shield our consumers and our businesses rather than continue with this big defense push. And of course, the other side is saying, no, there's no going back on this.
- [07:33]
B
Yeah. Especially because, you know, there's the. The kind of mental divide between the frugals, spenders, but there is also the geographic divide because obviously the southern states are pretty far from Russia, whereas the Baltics, the Nordics, are quite concerned about the fact that they could be looking down the barrel of an invasion sometime soon.
- [07:50]
C
Absolutely, yeah.
- [07:56]
B
Nick, we were just talking about Germany's economy taking another hit from this latest energy crisis in the fallout from the Iran war. But of course, it's not new. Germany's been in the economic doldrums for a while, and the pressure on Berlin is now starting spill over into Brussels. So Ursula von der Leyen, she's in Berlin today where she'll speak at a meeting of the cdu CSU Parliamentary Group in the Bundestag. We don't know what she's going to say, but we sort of know what she's going to hear.
- [08:23]
C
This is a really interesting one. This is kind of like her going to headquarters, effectively. Right. We forget about it. But she's a CDU politician to begin with, and this is the most powerful faction in the EPP group. They have real power to kind of influence her or put pressure on her. So what's going on there? They're increasingly frustrated with Brussels. They're warning about overregulation, red tape, the pace of economic reform. Our colleague in Berlin, Oliver Noyen, has seen a draft strategy paper with 27 demands aimed at the commission.
- [08:56]
B
Yeah, and that draft is quite extraordinary. It is really a very aggressive document. Basically what they want is for the Commission to be faster and deeper when it comes to cutting EU regulation. They want to scale back the EU's institutional powers. They want to cut staff numbers. And like, the most stark one is that they want a new oversight body that would be able to veto commission legislation.
- [09:21]
C
Yeah, it's fascinating. And this is also something that we'd scooped a couple weeks ago. A bunch of countries, including Germany, urging the commission to cut back its staff by 2000. 2000 staffers in the upcoming budget. They're really sort of reigning in. I would make one point. There are no plans to build anything in these proposals. This is all about unwinding stuff.
- [09:42]
B
Yeah. And a lot of these things are actually, they're almost impossible because it requires treaty change. It's very, very difficult to achieve some of the things that the CDU wants. But I think it's less about whether or not they can achieve these demands, these goals, and more about the message that they're sending by making them. Because I think that part of the reason why you've got the CDU writing a document like this is to demonstrate that they are on side with the people, that they want to cut red tape, they're on side with businesses. And I think that's again, one of those moves designed to take some of the wind out of the sails of the AFD, which is nipping at the CDU's heels. And the CDU has been sort of tanking in popularity. So I think this is just another way of trying to re seize the momentum.
- [10:23]
C
It's another case of kind of tail wagging the dog where the AFD is in a way kind of setting the agenda and setting this kind of skeptical tone for the cdu. And as you said, Mertz deeply unpopular. I think I saw a poll where he's at 21 approval rating in Germany, one of the lowest rated EU leaders at the moment.
- [10:42]
B
Yeah. And of course, you know, Mertz is doing something that is an age old kind of tactic of national politicians where you try to shift some of the blame for some of the problems in your own country onto Brussels. But what's unusual about this is that Ursula von der leyen is the CDU's woman in Brussels. So it's quite an unusual dynamic playing out. And we're going to see a pretty interesting joint press conference later today between Ursula von der Leyen as well as Jens Spahn, who's the CDU CSU parliamentary leader, and also Alexander Hoffman, who's the deputy parliamentary leader and the chairman of the csu. Nick, this one is one I am so excited about because I am constantly finding myself finishing work and realizing that all the shops are closed. Brussels shops are going to be staying open later and plus they're going to be open on Sundays pretty soon. So it's pretty exciting news.
- [11:37]
C
Very exciting news. And I was sharing my excitement to the cashier at my local supermarket and I promptly got a little lesson in ills of capitalist society and how this was a terrible thing. I said, okay, to each, to each their own.
- [11:49]
B
Yeah, I think what we found is the dichotomy of views on, on this particular topic. So basically, what's happening is that the government is going to be getting rid of a rule that forces shops to close at least one day a week and also forces them to close at 8pm most other days. And the idea is to help stores that are bricks and mortar retailers compete with online retail where obviously they never close. So the idea is to kind of allow basically the Belgian taxman to collect retail earnings and to make sure that they're getting a cut of the pie, really, if we're, if we're talking about it. But of course, there is this kind of idea of like, okay, well, what happens to the people have to man those stores on those days when they normally would not have done that previously.
- [12:30]
C
Yeah. And we've seen the retail workers raising some concerns. They're worried about the longer shifts, more evening and potential Sunday work. All D staff have been striking over possible Sunday openings. And let's say this isn't even yet in force. It's been approved by the Belgian government, but it's not yet law. It's part of a coalition deal that now needs to go through Belgian parliament approval. I mean, before this is in place. It could be, you know, the 2040s.
- [12:56]
B
But no, we're expecting to enter. We're expecting it to enter into force this summer. I'm so hopeful, Nick, because there is nothing like a little bit of retail therapy for me and sadly, not a lot of options considering the opening times. But maybe this is a sign of the direction of travel because this is a complaint that people have in cities around Europe. It's not just a Brussels problem. It's also a problem in other cities where a lot of stores are not open on a Sunday. So it's difficult for people to do their weekly shop just on that one Saturday. Those shops are pretty crowded.
- [13:29]
C
I think people should message in and tell us what they think about this.
- [13:32]
B
I would love to hear from folks. Let's hear from people on our WhatsApp line. Link is in the show notes. Let us Are you happy? Are you sad? Are you going to miss the blissful quiet of everything being shut on a Sunday?
- [13:43]
C
The day of contemplation.
- [13:45]
B
Day of contemplation and of rest. Not for us though, Nick. All right. There's a big celebration in the Netherlands today. It's King Willem Alexander's birthday and also known as King's Day.
- [14:01]
C
Finally.
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B
You've been waiting all year for this 364 days. You've been saving up your orange outfits. You're really ready to rock.
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C
Every single thing on me is orange right now.
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B
If you could only see listeners. It's true. And it's a good shade on you, Nick. Folks, that's about it from us today. Subscribe, if you haven't already. Leave us a review. We've been stuck on 676 reviews on Spotify for ages, Nick. I like to refresh that counter. And it's just been. It's not enough, frankly. Come on, people, we know thousands of you are listening. Leave us a rating.
- [14:35]
C
Yeah, let's get that to three digits.
- [14:37]
B
Let's get it to four digits. Nick, there's a reason why you are not a mathematician.
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C
Oh, my God. Someone pull the plug.
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B
All right, I'm gonna pull the plug now. Save you from your misery. That's it from us today, you'll be hearing from us tomorrow.
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C
But, yeah, we're. We're. We're. I don't know. I don't know what to say.
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B
We're sad and tired. We're hungry. We need to pee some.
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D
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