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

It’s the first day of a two-day summit dedicated to conveying the image of a more assertive Europe. EU leaders will vow to make the bloc strategically autonomous, reducing their dependence on imports from countries like China. Speaking of which, they will welcome (and give themselves credit for) Xi Jinping’s commitment to carbon neutrality. The draft communique we have echoes Donald Trump a bit, stressing “the need to rebalance the economic relationship and achieve reciprocity,” while also lambasting Beijing’s human rights record. Leaders will also seek a carrot and stick approach with Turkey. But unlike China, there’s no real consensus. The discussion could go either way, and Cyprus’s insistence that it won’t sign off on sanctions against Belarus unless the EU agrees to punitive measures against Turkey, means the summit could end up exposing the bloc’s divisions instead of highlighting its assertiveness.

Nikos Chrysoloras andJohn Ainger

What’s Happening

Recovery Woes | Fraught negotiations over the terms attached to the EU’s jointly-financed economic recovery package continue, with no breakthrough in sight. Germany warns it’s very likely things won’t be up and running come Jan. 1, delaying the flow of much-needed cash to the continent’s battered economies. Whether all of this is theatrical tactics, remains to be seen.

Inflation Overshoot | ECB President Christine Lagarde says it’s worth examining a Federal Reserve-style strategy that allows inflation to temporarily rise above the institution’s target. Here’s how the policy looks in the U.S. and what it means for the value of the money in your pocket.

Time Bomb | Italy’s market crisis may have subsided, but the debt worries that caused it will haunt Europe for a while. That’s the bleak outlook that Finance Minister Roberto Gualtieri will reveal this week when he unveils budget targets that are likely to show his ambitions to fix the region’s third-biggest economy remain limited for now.

Listen Up | The stricter the measures taken on the pandemic, the better it is for health and ultimately the economy, according to Marc van Ranst, a virologist at KU Leuven in Belgium. He tells us in this week’s podcast that schools can remain open in Europe, but the lesson is still that it’s better to take tough measures as early as possible.

In Case You Missed It

Brexit Barbs | The nominee for the EU’s top financial oversight job warned the U.K. to expect “consequences” after Brexit if London decides to split with the bloc on how it regulates the industry. Mairead McGuinness told bloc lawmakers that the two sides would have a “very different relationship.” So far though, things don’t look too good for the future of Britain’s financial sector.

Rapid Testing | A test for Covid-19 that delivers results in 15 minutes has been cleared for use in Europe, with the U.S. company that manufactured it, Becton Dickinson, expecting to begin selling the test in the region at the end of October. Still, mass-testing won’t likely solve the pandemic.

Engine Blowup | A three-year French investigation into a near-catastrophic Airbus SE A380 engine blowout over Greenland found hidden weaknesses in the structure of a widely used metal alloy, with safety implications for plane equipment worldwide.

Lobbying God | Even the pope isn’t safe from the crossfire between the world’s two superpowers. U.S. Secretary of State Michael Pompeo urged the Vatican to ramp up opposition to governments abusing religious freedom, just as the latter grows closer to forming diplomatic ties with China.

Communist Cribs | If you want to see where the average Prague resident lives, you’ll have to take more than a quick trip around the city’s historic heart. Here’s how the city’s Communist-era apartments aren’t just surviving, but thriving.

Chart of the Day

Top WTO Awards

The transatlantic trade conflict isn’t showing signs of winding down any time soon, and a ruling from the World Trade Organization means a fresh round of retaliatory tariffs could jeopardize the nascent economic recoveries in both the U.S. and European Union. A key question now is whether the EU will move quickly to trigger tariffs against the U.S. or await the outcome of the Nov. 3 election.

Today’s Agenda

All times CET.

  • 11 a.m. Eurostat releases August unemployment reading
  • 3 p.m. European Banking Federation event with ECB’s Andrea Enria, UniCredit CEO Jean-Pierre Mustier, SRB’s Elke Koenig, EBA’s Jose Manuel Campa
  • 3 p.m. Special EU leaders summit to discuss external relations, in particular with Turkey, China and Belarus, and the poisoning of Alexei Navalny
  • 4:45 p.m. Didier Reynders, EU justice commissioner, briefs EU lawmakers on the need for a conditionality clause in the next framework on democracy, rule of law and fundamental rights
  • EU climate chief Frans Timmermans participates in the Global Green Deals Forum in Berlin
  • EU antitrust chief Margrethe Vestager delivers a speech at the AmCham Annual Transatlantic Digital Economy Conference
  • Informal meeting of EU environment ministers 

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— With assistance by Zoe Schneeweiss

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