Good morning from Berlin.

Feeling the breath of the rising far-right AfD, Friedrich Merz, the frontrunner for Germany’s chancellor, is rushing to cut the red tape that paralyses German businesses while putting forward a stricter migration policy.

For both goals, he needs to control Brussels politics. Therefore, he relies on a conservative trio: himself controlling the Council, Ursula von der Leyen to bring Berlaymont's regulation fanatics into line, and Manfred Weber to find majorities in the EU House. 

Will this be easy? Not at all.

On the left, the Socialists and Greens won’t easily back down on the green push and migration, while finding majorities to the right hides dangerous traps for the EU centre-right. 

Nick Alipour, reporting from Berlin, discusses all backstage talks and the trio's “ego” element.

In a debate with EU Trade Commissioner Maroš Šefčovič on the controversial EU-Mercosur deal on Thursday, MEPs broadly expressed the views of their respective countries rather than following the line of their political groups, Maria Simon Arboleas and Sofia Sanchez Manzanaro write. 

Meanwhile, the Commission will decide today on Austria’s fiscal handling. Eight other member states, including France and Italy, are already subject to a so-called “excessive deficit procedure” (EDP), which Brussels initiates against member states whose fiscal deficits consistently exceed the bloc’s threshold of 3% of annual GDP.

But an EDP against Austria would be a severe blow to Herbert Kickl and his far-right Freedom Party (FPÖ), which, together with its prospective coalition partner, the conservative Austrian People's Party (ÖVP), submitted a deficit-slashing proposal to Brussels earlier this week.

Kickl is widely expected to lead Vienna’s next government after the collapse of ÖVP-led centrist coalition talks earlier this year. Early signs look promising for the would-be Volkskanzler: The Commission described talks held on Tuesday between EU and Austrian officials as “good and constructive”. 

In the environmental sector, the World Economic Forum is compensating political, business, academic, and celebrity elites who travel to next week's Davos summit by low-emission rail. Still, delegates seem to prefer flying to Switzerland on their private jets.

Lastly on health, the European Parliament may have given the nod to the new health committee's mandate at the end of 2024, but other committees are still fighting to get their grip on key files. 

BERLIN

As German politicians hit the campaign trail ahead of a 23 February national election, they are ignoring the elephant in the room – the head of the country's leading economic institute said. Read more.

German centre-right party wants agriculture ministry back. Germany's Christian Democrats made it clear they want to regain control of national farm policy amid poll lead in February's election. Read more.

ROME

Meloni only EU leader invited to Trump’s inauguration. Donald Trump’s 20 January inauguration boasts a thin European guest list, with Italian Prime Minister Giorgia Meloni the only head of state personally invited. Read more.

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MADRID

Catalan separatist leaders unite to up pressure on Sánchez. The leaders of the two main Catalan separatist parties agreed to pressure Spanish Prime Minister Pedro Sanchez to make more political concessions to Catalonia. Read more.

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LISBON

Portugal turns its back on nature restoration with new building law. Portugal has recently passed a controversial law to unlock more buildings in green areas, triggering criticism from NGOs and opposition politicians, who say that the move undermines the EU's nature restoration ambitions. Read more.

NUUK

US President-elect Donald Trump did not withdraw his previous threat of targeted tariffs on Danish goods in a phone call with Prime Minister Mette Frederiksen, as his desire for control of Greenland shows no sign of abating. Read more.

LONDON

Why an EU-UK 'youth mobility' deal is hard – and how it could work. Rats fleeing hell face better odds than the EU 'youth mobility' motion submitted to the British parliament this week, yet the proposal is not far from what may eventually become UK government policy. Read more.

WARSAW

The far-right Confederation Party expelled MEP Grzegorz Braun after he revealed plans to run in the presidential election, adding another populist to the race that will likely benefit the opposition PiS party. Read more.

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BUDAPEST

Hungary wins EU Commission approval for long-delayed budget plan. The European Commission endorsed Hungary's plan to comply with the Union's budget rules on Thursday, marking a slight easing of tensions in Budapest and Brussels' fractious relationship – at least for now. Read more.

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PRAGUE

Czech NGOs file EU complaint over power plant mercury emissions. A coalition of Czech environmental organisations has filed a complaint with the European Commission, accusing the Czech authorities of failing to enforce EU environmental legislation at the Počerady coal-fired power plant. Read more.

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KYIV

Kyiv pushes ahead controversial €600m purchase of Russian ‘junk’ nuclear reactors. Reviving a Soviet-era project, the Ukrainian parliament has authorised the purchase of two Russian nuclear reactors from Bulgaria. Read more.

SOFIA

Bulgaria's parliament approved on Thursday a cabinet led by Rossen Zhelyazkov, a former parliament speaker, ending months of negotiations on forming a coalition government. Read more.

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BUCHAREST

Romanian civil society, opposition slam presidential rerun arrangements. The decision to rerun the annulled presidential election on 4 and 18 May has already drawn criticism for a perceived lack of transparency surrounding the decision and the voting period for Romanians abroad. Read more.

Romania flags ‘national security risk’ in sale of energy company to Hungary. The Romanian Energy Ministry has warned of a national security risk related to the potential sale of local energy provider E.ON to Hungary's MVM over its ties with Russia. Read more.

• EU: Commission President Ursula von der Leyen resumes in person meetings; Participates in EPP Leaders’ Retreat;
• High Representative for Foreign Affairs and Security Policy Kaja Kallas receives European Bank for Reconstruction and Development President Odile Renaud-Basso; Hosts Prime Minister and Foreign Affairs Minister of Palestine Mohammad Mustafa;
• Trade and Economic Security Interinstitutional Relations and Transparency Commissioner Maroš Šefčovič hosts Chinese Mission to the EU Head Ambassador Cai Run;
• Agriculture and Food Commissioner Christophe Hansen participates in ministerial meeting on Food and Agriculture in the Berlin Process; Holds meetings with Ukrainian Minister of Agrarian Policy and Food Vitalii Koval, Moldovan Minister of Agriculture and Food Industry Vladimir Bolea, African Union Commissioner for Agriculture, Rural Development, Blue Economy, and Sustainable Environment Josefa Leonel Correia Sacko; Participates in Food and Agriculture Global Forum;
• Equality, Preparedness and Crisis Management Commissioner Hadja Lahbib meets with Jordan Civil Society Organizations;
• Financial Services and the Savings and Investments Union Commissioner Maria Luís Albuquerque receives International Financial Reporting Standards (IFRS) Foundation Trustees Chair Erkki Liikanen;
• Environment, Water Resilience and a Competitive Circular Economy Commissioner Jessika Roswall receives European Chemical Industry Council President Ilham Kadri.

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[Edited by Sarantis Michalopoulos, Martina Monti, Alice Taylor-Braçe]