Good morning and welcome to the Euro Express.

Eurozone Inflation rate The fall for the first time since last year has given rise to the sails of the currency hawks that have been ringing alarm bells in recent months-even if only temporarily. We will study what this development means and how long it may last.

along with EU presidency About to change hands from Portugal to Slovenia, we think it would be helpful to look at the highlights (and lows) of the various policy documents that Lisbon manages the EU. (For trade lovers, our sister newsletter Trade secret investigation The president can exert surprising influence in trade agreements. )

In Berlin, we are studying the possibility of the Social Democrats entering the next coalition government, in the words of their candidate for prime minister (and current finance minister) Olaf Schultz.

Tortoise inflation

This week, Bundesbank President Jens Weidmann compared inflation to the Galapagos Giant Tortoise, which was mistakenly classified as extinct for 100 years, writing Martin Arnold In Frankfurt.

After central bank officials have been worried about low inflation for many years, some small fluctuations in Europe have recently prompted Weidman and others to start pushing for the tightening of ultra-loose monetary policy in the region.

But this situation seems to stop today, albeit only temporarily, because the euro zone inflation data is expected to decline for the first time in nine months.

The Eurozone Unified Consumer Price Index is expected to fall from 2% in May to 1.9% in June, reflecting a slowdown in energy price growth compared to the same period last year.

Economists blamed a similar “base effect” and this year’s Pentecostal holiday time that caused the German inflation rate to drop from 2.4% in May to 2.1% in June. At the same time, the Spanish inflation rate has stabilized at 2.4%.

Most economists expect inflation to resume its upward path later this year, and some people are beginning to question whether the ECB will fall back to 1.4% in 2023. “The European Central Bank will find it increasingly difficult to insist that ING’s head of macro research, Carsten Brzeski, said it has a moderate attitude towards inflation.

Conservative commentators in Germany have long worried about excessive inflation and worried that the European Central Bank’s loose monetary policy would lead to a spiral increase in the cost of living.The Bundesbank predicts monthly inflation Will reach 4% this year.

“In my opinion, the risks surrounding the price outlook have changed,” Weidman said this week, warning that “upside risks to price development in the euro zone dominate.”

Yesterday there were further signs of rising inflationary pressures when the European Commission stated that its latest corporate survey showed that corporate sales prices are expected to rise for the fourth consecutive month.

The sales prices of retail and industrial companies are expected to hit a record high, while the sales prices of construction companies are expected to reach their highest levels in two years, and the sales prices of service industries are expected to climb to highs in more than two years.

Consumer prices are expected to rise for the sixth consecutive month, but the level is much lower. At the same time, the Eurozone Economic Sentiment Index reached a 21-year high of 117.9, which, as Committee Chair Ursula von der Leyen said, highlights that the economic outlook “is getting worse every week. The better it comes.”

Mixed bag

Looking back at Portugal’s EU presidency in the past six months, a rather complicated picture emerged, he wrote Peter Wise In Lisbon and Valentina Pop In Brussels.

On the positive side, Portugal helped to approve the Recovery and Resilience Fund and related tools, and Portugal itself is First country Make its national plan approved by the European Commission.

Portuguese diplomats also managed to get EU countries to agree to a joint framework Digital Travel Pass It can include Covid-19 vaccination certificate or test. However, due to the Delta variant, countries can still allow travellers who have received vaccines not approved by the EU market to enter the country, or quarantine travelers who have received EU-authorized vaccines.

As far as the projects are already in preparation, Portugal has reached an agreement on a common agricultural policy and passed the approval of the European climate law.However, critics point out that climate law is a form, and CAP protocol Failed to solve the rather difficult problem of green agriculture.

The Social Issues Summit held in Porto in May was hyped by Portugal, but Overshadowed The United States announced an exemption for vaccine patents, which caught the European Union by surprise. However, the virtual EU-India summit held in Porto the next day was considered a success because it marked the start of trade negotiations (As reported by the Financial Times).

The Porto summit was not without controversy. The leaders of Germany, the Netherlands, and Malta refused to participate and made virtual adjustments, mainly to avoid negative news about traveling to beautiful places while most of Europe was still under lockdown.

One of Portugal’s biggest disputes during its EU presidency was the government’s decision to take a neutral stance on it. Hungary’s anti-LGBT+ lawPortugal stated that, as the EU presidency, it feels obligated to remain neutral and made it clear that once the baton is handed over to Slovenia, it will sign an open letter condemning the Budapest law, which has been signed by 16 member states.

In this regard, Brussels’ domestic criticism is considered unfair.

During this period EU Summit in June, Prime Minister Antonio Costa is one of the outspoken critics of the Prime Minister of Hungary.

Portugal and Hungary “do not share the same values. According to diplomats who witnessed the discussion, they are diametrically opposed.

Overall, considering that most meetings actually had to be held due to the pandemic, the President of Portugal made a good impression in Brussels. “The Portuguese steered the ship steadily. Vasco da Gama would be proud,” said an EU diplomat.

“Given the difficult situation, the Portuguese presidency has done a very good job,” said another EU diplomat. “They are efficient and professional, and they are definitely better on the pitch than the national team in the 2020 European Cup.”

Daily Chart: Finance Wake Up

There are more and more discussions about inequality in the financial sector, and more and more central bank governors talk about this topic.but Martin Wolf writes Although there are ways for monetary policy to help distribute wealth, the reforms needed will be bolder than most economists expect.

Is Schultz better than Schultz?

With less than three months to go before the German federal election, the prospects of the Social Democratic Party are not optimistic.A recent opinion poll on ZDF-Politbarometer shows that the party’s approval rate is 14%, which is far behind the center-right CDU/CSU (CDU/CSU) (29%) and the Green Party (22%). Write Guy Chazan In Berlin.

But Olaf Schultz, the Minister of Finance and candidate for the Prime Minister of the Social Democratic Party, insists that the current polls are meaningless: Most Germans have just recently lifted the six-month blockade and prepared for the summer vacation, and they are trying to forget political.

“The decision on whom they will vote for will mainly be made in August and September,” he told the Financial Times. Until then, anything can happen. “If you look at the last election, the polls show a lot of changes to Election Day.” (The then SPD prime minister candidate Martin Schultz received very high poll ratings in the spring, but led the polls on election night. The party achieved the worst result in post-war German history.)

Schultz believes that Germany’s political landscape is increasingly divided, and votes are scattered among the six parties, which is beneficial to the Social Democratic Party. “This means that only small changes in voter behavior can create new constellations,” he said.

Schultz’s strategy is clear: defeat the Green Party. This may prevent the cooperation between the CDU/CSU and the Green Party-many people believe that this is the most likely outcome of the September election-and is a “between the Social Democratic Party, the Green Party and the Liberal FDP” “Traffic Light” alliance pave the way for principals.

I think many people will think that I am the best choice because I have more government experience than any other candidate.

Part of this strategy is based on the hope that as the election approaches, voters will scrutinize candidates more carefully — and make Scholz the safest choice. He also claimed to have a “clear plan” to mobilize the huge investments needed to achieve Germany’s carbon neutrality by 2045.

Whether this method will work is still anyone’s guess.

Experts say that the Social Democratic Party is hovering between too many stools: Germans who want to deal with climate change will vote for green, and those who are more concerned about the economic recovery after the coronavirus will vote for the CDU/CSU.

The experts said that Schultz has not presented a convincing reason to voters as to why they should support the Social Democratic Party, which has had identity problems in some respects after supporting the Angela Merkel government for eight years. .

What to watch today

1. Negotiators from nearly 140 countries held virtual meetings, seeking to discuss an issue with the OECD. The world’s lowest corporate tax

2. The EU and the UK are expected to announce Delay limit Frozen meat exports from the UK to Northern Ireland

Noteworthy

The EU is based on the rules that its member states apply consistently, so if this is no longer the case, the group may be undermined

• Rebellious infection: Didier Reynders, European Commissioner for Justice Tell the Financial Times There are more and more questions about the primacy of EU law and the European Court of Justice’s final ruling power, which has created a “spillover effect” that makes member states bolder to raise legal challenges.

• Delta Ruins Summer: Southern European countries expecting to restart their economy in the summer are forced to Restrict foreign travel Or risk the rapid spread of Delta variants.

• Green plagiarism? German plagiarism experts Claimed the most recent book The entire part written by Annalena Baerbock, Green’s candidate for prime minister, was copied from other sources without a signature. Baerbock’s lawyer and her publisher both disputed the findings and stated that the relevant paragraph contained public information. (Emphasis)

• Following Hungary and Poland: The European Commission is planning to take legal action against Poland’s suppression of LGBTI+ rights, after several cities announced that they did not have LGBTI+ According to BloombergLast week, the European Commission announced legal measures against Hungarian legislation. Brussels believes that the legislation equates homosexuality with pedophilia.

Newsletter recommended for you