Welcome to the weekend issue of Brussels Edition, Bloomberg’s daily briefing on what matters most in the heart of the European Union. Join us on Saturdays for deeper dives from our bureaus across Europe.

BRUSSELS — A year after Belgium went to the polls in federal and regional elections, the country is in familiar territory — mired in a political mess. 

A five-party coalition led by Flemish nationalist Bart De Wever has been in situ since February — good news for a country that broke its own record after going without a government for 652 days following a political crisis in December 2018. But in recent weeks, political tensions have flared again.

Rating agency Fitch cut the country's sovereign credit last week, flagging concerns about Belgium's debt pile. Like many NATO allies across Europe, Belgium, is struggling to balance the demands of day-to-day spending with the need to invest more in defense.

The problem is particularly acute in this country of 12 million people, which despite hosting the NATO headquarters has been a laggard when it comes to military spending.

During a debate in the Belgian parliament this week, De Wever said his government won’t oppose the new NATO goal of spending 5% of its GDP on defense — a target set to be enshrined at next week's NATO summit in The Hague.

But De Wever called the spending promise "a bitter pill," adding that Belgium would call for "the biggest flexibility possible" in how that goal is implemented.

The Schuman roundabout in the heart of the EU quarter in Brussels. Photographer: Nicolas Tucat/AFP

The European Commission projects that the country's deficit will swell to 5.4% of GDP this year as the government struggles to rein in spending. De Wever’s coalition has announced plans to cut social services, including a clampdown on long-term jobless benefits. This has sparked protests in Brussels, as well as several national strikes that have canceled flights and snarled public transportation. Yet another walkout is scheduled for Wednesday.

The government for the city of Brussels, which hosts the EU, is in an even worse place. It still has a caretaker government 377 days after the election — and there’s no sign of a breakthrough. Rating agency Standard and Poor’s downgraded the Brussels region’s debt last week.

Such is the perilous state of the city’s public finances that it has asked the EU to cough up money for construction works at the Schuman roundabout next to the bloc’s main offices. So far, the EU is refusing to open the purse strings, curtly noting that Belgium still has some funds available under the bloc’s pandemic recovery scheme.

__ Lyubov Pronina, Brussels reporter

Weekend Reads

LVMH’s €221 Billion Slump Heaps Pain on Billionaire Arnault

Arnault speaking at the LVMH annual general meeting. Photographer: Nathan Laine/Bloomberg

LVMH, the world’s largest luxury group, is facing deep challenges. An unprecedented demand slump in China and the threat of steeper US tariffs have hammered the company’s shares. The slump has also knocked its billionaire CEO Bernard Arnault from first to ninth place among the world’s wealthiest people, with questions mounting about succession plans at the company.

Storm Clouds Loom Over Danish Island Festival

Denmark’s annual democracy festival, Folkemødet, attracts thousands of people each year to the Baltic island of Bornholm to mingle with politicians, diplomats and business leaders in the summer sun. This year, the current geopolitical climate loomed large over events, as fighter jets flew overhead, a Navy frigate patrol ship kept watch just offshore and attendees were given tips about stockpiling food.

China’s Electric Vehicles Accelerate into Europe

China’s BYD is gaining sales momentum across Europe with sleek showrooms, bold pricing, and a dealer push making inroads across the continent.  The automaker hammered the point home last month with an audacious drone display at Rome’s Olympic Stadium, a move that shows the company’s confidence it can sell electric vehicles on Europe’s home turf. 

Europe’s Power Market Is So Hot, Traders Are Leaving Retirement

Europe’s renewables boom is disrupting longstanding market trends, with many former traders now getting back in the game. The race to hire scores of traders, developers and analysts has created a talent war that’s driven up salaries, as firms expand teams to cover the short-term power markets.

How E-Scooters Conquered (Most of) Europe

A line of Tier Mobility SE public hire e-scooters on a street in Madrid. Photographer: Paul Hanna/Bloomberg

Seven years after their arrival on the streets of Europe, e-scooters are fixtures of many European cities. The tiny rentable vehicles offer a quick, green and space-efficient way to traverse many urban neighborhoods. But they’ve also provoked a backlash, with Paris, Madrid and Malta banning shared e-scooters entirely.

This Week in Europe

• Monday: EU foreign ministers meet in Brussels; Canadian Prime Minister Mark Carney in Brussels for EU-Canada summit
• Tuesday-Wednesday: NATO leaders meet for summit in The Hague
• Thursday-Friday: EU leaders meet in Brussels for summit

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