Brussels Edition: Judgment Day for Spanish Banks

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

It's a day of reckoning for Spanish banks, which could face billions of euros in compensation claims if the EU's highest court rules that they weren't sufficiently transparent in setting mortgage rates. The European Court of Justice will today give its verdict on whether the lenders adequately informed customers about why they were sold mortgages with interest rates based on a Spanish central bank index rather than the more widely used Euribor, often resulting in thousands of euros in extra costs. The decision will influence how such claims will be judged across Spain in the future. A worst-case scenario for the banks could be a retroactive ruling, meaning lenders would have to pay back charges for already-matured mortgages and past interest payments. 

What's Happening

Frontier Fight | The EU's top brass will head to Greece today in support for the front-line nation over the migrant situation unfolding at its Turkish border. Question is: Will Recep Tayyip Erdogan see through his threat to let millions of migrants cross land and sea to Greece? Also, what does the evolving situation at the Syria-Turkey border mean for Europe? 

Spy Scandal | Former Commission President Jean-Claude Juncker must today relive a scandal that cost him the Luxembourg premiership. Although he's not on trial, court hearings will revisit awkward questions to shed light on his alleged lack of oversight of spying operations in what rocked Luxembourg and remains a political flashpoint.  

Inflation Clues | Euro-area inflation probably slowed to 1.2% last month, snapping three months of accelerating consumer prices, according to economists in a Bloomberg survey ahead of data due today. The figures could be the first evidence of the impact on the region of coronavirus fears, with oil costs dropping as China's demand for crude has fallen away. 

Finance Calls | G-7 finance ministers and central bankers plan to hold a teleconference today to discuss their response to the economic threat posed by the coronavirus. Their communication comes as governments struggling to contain the fallout from the outbreak face mounting calls to unleash a major fiscal stimulus. ECB President Christine Lagarde belatedly joined the crowd pledging to take action if needed.

Climate Law | The Commission plans to review the bloc's 2030 emissions-reduction target and may propose toughening it to remain at the forefront of fighting climate change, according to a draft law due to be unveiled tomorrow. The plan will seek to cement the EU's goal of climate-neutrality by 2050, in an effort to make Europe the world's first continent to eliminate emissions.

In Case You Missed It

Viral Outlook | Global economic growth will sink to levels not seen in over a decade as the coronavirus outbreak hammers demand and disrupts supply, challenging central banks and governments to respond, according to the OECD. The forecast comes as policy makers are already getting battle-ready, raising expectations they may act amid a global stock market rout.

Green Data | The financial industry is pushing the Commission to force companies to report more data on climate change, setting them up for a potential clash with their clients. Small- and medium-sized companies, the vast majority of businesses in the EU, bristle at more costs and bureaucracy.

German Debt | Germany has enough spending flexibility to react to economic crises without changing constitutional deficit limits, the finance ministry said. The statement came as talks of a spending boost gather pace after the economy narrowly avoided recession, hit by everything from trade woes and Brexit to auto-industry pressure, and now the coronavirus. 

Trade Talks | In trade talks with the U.S., Britain insisted it will not give ground on politically sensitive issues, including drug prices and animal welfare. The discussions come at a tricky moment, with links between the two allies under strain over a series of issues, including Boris Johnson's decision to reject U.S. requests to ban Huawei from its 5G networks.

Slovak Coalition | Slovakia's president said she'll ask anti-corruption crusader Igor Matovic to a form a government after his party triumphed in elections at the weekend, propelled by anger at the killing of a journalist two years ago. There are question marks, however, over the durability of the new government because of potential policy and personality clashes. 

Chart of the Day

Euro-area factories saw the first signs of the coronavirus hitting business in February, with widespread delivery delays and steep declines in foreign orders. The epidemic, which has spread to the European continent after emerging in China late last year, is threatening to halt a much-awaited gradual recovery in manufacturing. It could also test the ability of the ECB and euro-area governments to respond.

Today's Agenda

All times CET.

• 9 a.m. Court hearings in Luxembourg spy scandal begin
• 9 a.m. EU's top court gives a binding decision on whether Spanish misled customers on mortgage rates
• 9 a.m. Fintech conference with ESMA's Steven Maijoor, EBA's Jose Manuel Campa, Commission's Sean Berrigan, German Finance Ministry's Joerg Kukies and Belgian financial regulator's Jean Paul Servais 
• 9 a.m. ISDA event on EU banking regulation with Commission's Berrigan, EBA's Campa, ECB supervisory board member Kerstin af Jochnik 
• 11 a.m. Eurostat to release flash estimate of euro-area inflation in February, as well as unemployment and industrial consumer prices readings for January
• The EU's top court rules in a case concerning Google in a fight over a Hungarian advertising tax 
• First round of post-Brexit negotiations continues in Brussels 
• Council President Charles Michel, Commission President Ursula von der Leyen visit Greece's border 

--With assistance from Stephanie Bodoni.

To contact the editor responsible for this story: Vidya N Root at vroot@bloomberg.net, Chris Reiter

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