Meloni’s moment

Italy’s first female prime minister has surprised allies and enemies alike with her diplomatic skills but trouble is brewing over the country’s debt burden. [View in browser]( [Bloomberg]( Welcome to Balance of Power, bringing you the latest in global politics. If you haven’t yet, sign up [here](. Hard-right populist or mainstream pragmatist? Giorgia Meloni [has shown she can be both](. Italy’s first female prime minister has surprised allies and enemies alike, with diplomatic skills that have won over peers from French President Emmanuel Macron and German Chancellor Olaf Scholz to Joe Biden in the US. She was instrumental in convincing Hungarian Prime Minister Viktor Orban to drop his opposition to additional aid for Ukraine to help fight off Russia’s invasion, despite the fact that her domestic coalition partners maintain a warm stance toward Vladimir Putin. But two years after being catapulted to power, and emboldened by last week’s European Parliamentary elections that confirmed her right-wing party as [Italy’s premier political force](, trouble is brewing that may determine if she survives until the end of her term in 2027. The [heavily indebted economy](, the European Union’s third biggest, is surviving on borrowed time, with the European Commission [poised to declare]( the country in breach of spending rules. Meloni is surrounded by allies she doesn’t trust, even within her Brothers of Italy party. She referred to herself as “that bitch” at a campaign rally last month after shaking hands with a regional governor caught earlier on a hot mic bestowing that same epithet on her. Her hardline stance on immigration, and LGBTQ and civil rights draws criticism at home and abroad. Yet, she’s a rare leader who’s able to straddle Europe’s ideological divides, and her profile will rise this week as Italy hosts the Group of Seven summit in Apulia. In the end, Italy’s perennially dysfunctional economy is likely to undermine her ability to emerge as some new type of pragmatic far-right champion able to ride the European wave of nationalist sentiment. Meloni will have to muster all her political skills to to face the coming challenges.—[Donato Paolo Mancini]( A Brothers of Italy rally in Rome on June 1. Photographer: Stephanie Gengotti/Bloomberg​​​​​ Global Must Reads As well as unsettling investors, Macron’s decision to [trigger a parliamentary vote]( caused consternation among blindsided lawmakers and officials from the French president’s Renaissance party. They fear the high-risk strategy is more likely to consolidate losses suffered in last week’s EU parliament election and undermine any remaining prospects for advancing their economic agenda, while [there’s a real chance]( it could hand control to far-right leader Marine Le Pen. Biden is expanding sanctions on the sale of semiconductors and other goods to Russia, targeting third-party sellers in China and elsewhere in an effort to undermine Putin’s war machine. The US president’s administration [will announce changes]( today that broaden the scope of existing export controls and restrictions to target US-branded goods even if they’re not made domestically, sources say. Mexican President-elect Claudia Sheinbaum is in a jam. She’s struggling to address investor concerns that the ruling party’s landslide election win will pave the way for proposed measures to [erode the judicial branch’s independence]( and allow a slate of constitutional changes to be pushed through quickly. Those worries have been roiling markets, sending the peso lower. Sheinbaum during a news conference in Mexico City on Monday. Photographer: Stephania Corpi/Bloomberg With the Conservative Party heading for what polls predict will be a historic defeat to Labour in the UK’s July 4 election, even Chancellor of the Exchequer Jeremy Hunt [is at risk of losing]( his parliamentary seat, in what would be a first according to House of Commons data going back to 1906. Former Labour leader Neil Kinnock, meanwhile, [told us]( that his party should leave itself “room to maneuver” to potentially raise taxes when in office. Hong Kong canceled the passports of six UK-based activists, including former lawmaker Nathan Law, in an unprecedented move as city officials [continue their crackdown on dissent](. Authorities accused them of continuing to “engage in acts and activities endangering national security” while residing abroad. The EU will slap additional tariffs of as much as 38.1% on electric vehicles shipped from China from next month, [escalating a global trade war]( and increasing the cost of selling cars in Europe for companies ranging from China’s BYD to Tesla. G-7 leaders gathering in Italy from tomorrow will call on China to stop enabling and sustaining Russia’s war on Ukraine, [according to a draft statement](. Thailand’s Constitutional Court said it will resume deliberations next week on a case that [seeks the removal]( of Srettha Thavisin as prime minister over allegations of ethical violations. Brazilian Finance Minister Fernando Haddad said there’s no Plan B after [lawmakers shot down]( his latest attempt to craft legislation aimed at getting the fiscal deficit under control. Washington Dispatch The [conviction of Hunter Biden]( on gun charges in Delaware seemed like an off-key echo of Donald Trump’s guilty verdict in a New York hush-money trial less than two weeks earlier. And the same question was being asked: What effect would it have on the election? The cases, unprecedented events in an era that never seems to run out of them, might or might not sway Americans considering candidates already very familiar, but two schools of thought quickly emerged in Washington. Some observers think Joe Biden [will have a harder time]( appealing to swing voters who have misgivings about Trump’s legal problems. Others say that the guilty verdict against the president’s son degrades the argument by Trump and his allies that the criminal-justice system has been corrupted by Democrats. The speculation [will likely continue](: Trump still faces charges in other cases, and Hunter Biden will be tried on tax violations in California in September. One person to watch today: Federal Reserve Chair Jerome Powell may provide the clearest hint yet on the timetable for cutting interest rates, which will likely include two 25-basis-point reductions this year. [Sign up for the Washington Edition newsletter]( for more from the US capital and watch Balance of Power at 1 and 5 p.m. ET weekdays on Bloomberg Television. Chart of the Day Source: Gallup The British economy lost more than $327 billion in potential output because of demotivated workers last year, adding to a productivity crisis that’s left the country falling behind other wealthy nations, [according to Gallup research](. The finding represents a reversal for the UK, which in the early 2010s had the second-highest proportion of engaged workers in the G-7. And Finally While Planet Earth has now seen 12 consecutive months of record-breaking temperatures, global warming is a particularly severe problem for Egypt, a desert country heating up at one of the world’s fastest rates. Experts at the Egyptian Meteorological Authority worry this summer [will be even more brutal]( than last year. The declining yield of its wheat crop due to heat and water shortages has meant more dependence on imports of a grain that’s vital for feeding Egypt’s population, while perpetual power cuts are sharply denting productivity. People cool off in the Nile river on the outskirts of Cairo. Photographer: Islam Safwat/Bloomberg More from Bloomberg - Check out our [Bloomberg Investigates]( film series about untold stories and unraveled mysteries - [Bloomberg Opinion]( for a roundup of our most vital opinions on business, politics, economics, tech and more - [Next Africa](, a twice-weekly newsletter on where the continent stands now — and where it’s headed - [Economics Daily]( for what the changing landscape means for policy makers, investors and you - [Green Daily]( for the latest in climate news, zero-emission tech and green finance - Explore more newsletters at [Bloomberg.com](. Follow Us Like getting this newsletter? 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