This Week in Europe: Euro inflation low, Europe reacts to Amazon fires and more

, by Pascal Letendre-Hanns, Radu Dumitrescu

This Week in Europe: Euro inflation low, Europe reacts to Amazon fires and more
Image by Samuel Mork Bednarz.

Members of the TNF team recount big events from Europe from the past week, and point attention to news that may have passed notice. What did we miss? Comment on our Facebook page at !

Italy looks to form new government

This week marked the official collapse of the populist government in Italy after Matteo Salvini effectively sabotaged the coalition and pulled out of the alliance with M5S. While Salvini may have been hoping to provoke new elections and capitalise on his party’s lead in the polls, M5S and opposition PD are in no mood for new elections. With the encouragement of President Mattarella, the two parties are now in talks to try and form a new government. This shift is a sign of how serious Italy’s political crisis has become as M5S and PD have never maintained good relations and have often publicly stated their disdain for one another.

However the thought of elections that could damage both parties and the prospect of Lega being put in charge of Italy’s next budget (to be decided in the autumn), has convinced M5S and PD to set aside their differences for now. Nonetheless, negotiations are still difficult due to differences over both policy and the question over whether Giuseppe Conte should stay on as Prime Minister (PD are opposed to the idea). It will also be a struggle to find a stable majority in the Italian Senate, where M5S and PD will likely need to rely on other parties. If they are unable to form a government, then Italy will likely be set for early elections in the coming months, not even two years since the last elections.

EU threatens economic consequences if Brazil does not control Amazon fire

The recently agreed trade deal between the EU and Mercosur is under threat as EU states come out in opposition to the failure of Brazil to uphold its environmental commitments as the Amazon rainforest suffers from severe fires and deforestation. As international condemnation rose, the Brazilian government gave little impression of being concerned, with President Bolsonaro even trying to blame NGOs for starting the fires. In this context, first Ireland and then France declared that they would not ratify the EU-Mercosur agreement until the Brazilian government changed course and took serious action to bring the fires under control.

At the opening of the G7 Summit, European Council President Donald Tusk reiterated this reality and warned Brazil that ratification was unlikely to be possible unless something was done. In addition, the Finnish government, which holds the rotating Council presidency, has gone even further and suggested that the EU look into banning meat imports from Brazil in order to apply further pressure on the far-right Brazilian President. Germany and the UK, however, have criticised this position on trade with Mercosur, arguing that stopping the trade deal won’t help the situation in the Amazon.

Estonia to lead development of new military unmanned vehicle

Estonia, along with Belgium, Finland, France, Germany, Latvia and Spain, has applied for funding from the European Defence Fund in order to develop unmanned ground vehicles, to be used by European armies. This project would build on advances made in civilian unmanned vehicles, though the requirements for combat situations are very different. The project is one of the PESCO initiatives agreed by EU Defence Ministers in 2018. For the application to be approved it will still need to be assessed by independent experts for the Commission, to ensure that the idea is viable and a good use of resources. The application requests around 30 million in funding from the Defence Fund, with participating states adding their own financing on top of this. It is expected that a first prototype will be ready by 2021.

Denmark launches world’s largest electric ferry

Last week, an all-electric ferry that is purported to be the world’s largest completed its first voyage between two Danish islands. The launch comes in the context of new emission laws, which will take effect in 2020. Ellen, as the ferry is named, voyaged between Fynshav and Søby in southern Denmark relying entirely on its battery. The ship can carry 200 passengers and 30 cars and was built by a Swiss firm called Leclanche. Between charges, Ellen has a range of 40 km. Every time it is docked, the ship will have a short recharge, with a full recharge every night. Denmark’s new government aims to reduce overall emissions by 70% by 2030.

Euro inflation at lowest level since 2016

On Monday, Eurostat released information which showed that the inflation in the euro area fell to 1% in July, compared to 2.2% the same period last year, and has reached its lowest level since 2016. As a result, the European Central Bank officials are considering relaunching an economic stimulus programme. GDP also slowed down across the euro area, rising with just 0.2% in the second quarter of 2019. Germany could enter a recession, according to Bundesbank, and international trade disputes affect European states increasingly, according to ECB president Mario Draghi. In response, the ECB is expected to relaunch its bond-buying programme if the situation does not improve.

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