1
00:00:02,440 --> 00:00:06,760
Speaker 1: Bloomberg Audio Studios, podcasts, radio news.

2
00:00:07,080 --> 00:00:10,480
Speaker 2: Lawmakers from the far left and right of France's political

3
00:00:10,480 --> 00:00:13,680
Speaker 2: spectrum are set to combine and topple Prime Minister Michelle

4
00:00:13,720 --> 00:00:17,520
Speaker 2: Barnier's government tonight in at Paris. The National Assembly set

5
00:00:17,560 --> 00:00:20,920
Speaker 2: to reconvene as we speak, and that is when we're

6
00:00:20,960 --> 00:00:24,400
Speaker 2: supposed to get the result. Covering it all is Stephen Carroll,

7
00:00:24,520 --> 00:00:27,840
Speaker 2: Bloomberg Radio Daybreak Europe anchor. Stephen joins us from our

8
00:00:27,840 --> 00:00:30,840
Speaker 2: Paris bureau. Stephen, good to see you this evening. Earlier

9
00:00:30,880 --> 00:00:33,360
Speaker 2: in your career, you spent a decade working for France

10
00:00:33,440 --> 00:00:37,400
Speaker 2: twenty four Television in Paris. You've interviewed President Emmanuel Macron,

11
00:00:37,640 --> 00:00:40,640
Speaker 2: Prime Minister Michelle Barnier. How did we get to where

12
00:00:40,640 --> 00:00:41,400
Speaker 2: we are today?

13
00:00:43,800 --> 00:00:47,240
Speaker 1: I mean, the short answer is that Emmanuel Macron called

14
00:00:47,280 --> 00:00:49,519
Speaker 1: an election in June. He wasn't happy with how his

15
00:00:49,600 --> 00:00:52,800
Speaker 1: party date in European Parliament elections, so he decided to

16
00:00:52,800 --> 00:00:56,040
Speaker 1: go to the country, dissolve the parliament, the National Assembly

17
00:00:56,200 --> 00:00:59,360
Speaker 1: call elections, thinking that it would reinforce his position give

18
00:00:59,400 --> 00:01:02,120
Speaker 1: French people the choice of who they wanted to govern.

19
00:01:02,200 --> 00:01:05,080
Speaker 1: And fortunately French people didn't have the same idea. And

20
00:01:05,080 --> 00:01:08,160
Speaker 1: what he ended up with was fewer numbers of MPs

21
00:01:08,240 --> 00:01:11,160
Speaker 1: in the National Assembly and a very fractured parliament. That

22
00:01:11,280 --> 00:01:15,399
Speaker 1: left three large groupings, the Marie Lepens National Rally on

23
00:01:15,520 --> 00:01:18,480
Speaker 1: the right, the far right, his Centrist group which he

24
00:01:18,520 --> 00:01:20,839
Speaker 1: picked up some of the center right party as well,

25
00:01:20,920 --> 00:01:23,320
Speaker 1: and this left wing alliance which is the biggest group

26
00:01:23,640 --> 00:01:26,720
Speaker 1: in the parliament as well. Nobody had a majority, nobody

27
00:01:26,800 --> 00:01:29,840
Speaker 1: could govern. Then he had to try and find a

28
00:01:29,840 --> 00:01:32,560
Speaker 1: government because his job as president he gets to nominate

29
00:01:32,600 --> 00:01:35,800
Speaker 1: the Prime Minister and set the agenda for policy. He

30
00:01:35,880 --> 00:01:38,679
Speaker 1: picked Michel Baunier, this man who has had a storied

31
00:01:38,720 --> 00:01:42,040
Speaker 1: fifty year career in French politics. He's been a minister,

32
00:01:42,080 --> 00:01:44,720
Speaker 1: He's been a European commissioner, he was the ease chief

33
00:01:44,760 --> 00:01:48,000
Speaker 1: negotiator on Brexit. He is a statesman. He brings with

34
00:01:48,120 --> 00:01:50,880
Speaker 1: him He's not from Macron's political family, so he brings

35
00:01:50,880 --> 00:01:53,160
Speaker 1: with him the sense of somebody who is above the

36
00:01:53,200 --> 00:01:56,560
Speaker 1: fray of politics. He's not currently an elected politician, so

37
00:01:57,000 --> 00:01:58,760
Speaker 1: got him in to try and run the government to

38
00:01:58,840 --> 00:02:02,680
Speaker 1: pass a budget, which was the biggest immediate concern. He

39
00:02:02,760 --> 00:02:06,280
Speaker 1: brought the budget to Parliament, tried to negotiate a compromise

40
00:02:06,360 --> 00:02:10,280
Speaker 1: with the various groups. Wasn't able to do that. Used

41
00:02:10,320 --> 00:02:13,600
Speaker 1: a constitutional provision that allows them to force it through parliament.

42
00:02:13,840 --> 00:02:16,480
Speaker 1: But unfortunately, the downside of using that provision is is

43
00:02:16,480 --> 00:02:19,280
Speaker 1: that the opposition can call a vote of no confidence

44
00:02:19,320 --> 00:02:21,280
Speaker 1: in the government. And that's where we are now, and

45
00:02:21,320 --> 00:02:23,919
Speaker 1: they're currently voting. After about two and a half hours

46
00:02:24,200 --> 00:02:26,880
Speaker 1: of debate in the French Parliament, lots of views expressed.

47
00:02:26,919 --> 00:02:29,160
Speaker 1: Mitelvannie got up at the end to lay out his

48
00:02:29,240 --> 00:02:32,240
Speaker 1: position to saying it's a moment of truth and responsibility

49
00:02:32,320 --> 00:02:34,680
Speaker 1: for France and we'll find out if anyone listened to

50
00:02:34,720 --> 00:02:36,200
Speaker 1: him in just a couple of minutes time.

51
00:02:37,720 --> 00:02:42,360
Speaker 3: And Stephen, what happens in the immediate aftermath if the

52
00:02:42,400 --> 00:02:50,200
Speaker 3: French government loses the no confidence vote.

53
00:02:47,800 --> 00:02:50,040
Speaker 1: So we will. The first thing that happens is the

54
00:02:50,040 --> 00:02:52,600
Speaker 1: government has to resign, right, so Mite Albanni and all

55
00:02:52,600 --> 00:02:56,160
Speaker 1: of his ministers will present their resignation to the President.

56
00:02:56,560 --> 00:02:58,800
Speaker 1: It then turns to the president who will have to

57
00:02:58,880 --> 00:03:02,280
Speaker 1: appoint the next government. But the more immediate problem, because

58
00:03:02,280 --> 00:03:04,680
Speaker 1: there's no deadline for when Emmanuel Macron would have to

59
00:03:04,720 --> 00:03:07,640
Speaker 1: pick a new prime minister to lead and form a

60
00:03:07,720 --> 00:03:11,120
Speaker 1: new government. The more immediate problem is is France's current

61
00:03:11,120 --> 00:03:13,080
Speaker 1: budget runs out at the end of the year, so

62
00:03:13,120 --> 00:03:15,520
Speaker 1: then we roll over into twenty twenty five and into

63
00:03:15,720 --> 00:03:19,359
Speaker 1: relative political unknown. There won't be a shutdown, and it's

64
00:03:19,360 --> 00:03:21,280
Speaker 1: actually been funny and a lot of the discourse here

65
00:03:21,320 --> 00:03:23,240
Speaker 1: people that keep mentioning, oh, it won't be like the

66
00:03:23,360 --> 00:03:24,720
Speaker 1: US government.

67
00:03:24,720 --> 00:03:25,680
Speaker 2: Shot, yeah, that's our problem.

68
00:03:25,760 --> 00:03:29,160
Speaker 1: They'll still keep collecting. Yeah, they'll still keep collecting taxes.

69
00:03:29,280 --> 00:03:31,480
Speaker 1: Even using the word shutdown in French was quite funny.

70
00:03:31,520 --> 00:03:33,919
Speaker 1: But they're still going to collect taxes. Public services will

71
00:03:33,919 --> 00:03:36,200
Speaker 1: still run. But essentially what they'll do is they'll take

72
00:03:36,200 --> 00:03:39,720
Speaker 1: the twenty twenty four budget, carve it up into twelve pieces,

73
00:03:40,000 --> 00:03:42,480
Speaker 1: and each department will get a twelfth of their budget

74
00:03:42,560 --> 00:03:45,440
Speaker 1: every month. That that presents, as you might imagine, all

75
00:03:45,480 --> 00:03:47,800
Speaker 1: sorts of problems, because it's very difficult to run the

76
00:03:47,800 --> 00:03:50,760
Speaker 1: state on that sort of month to month basis. It's

77
00:03:50,760 --> 00:03:54,080
Speaker 1: not like working on your overdraft. And the other problem

78
00:03:54,280 --> 00:03:56,360
Speaker 1: is is that there were a load of measures in

79
00:03:56,400 --> 00:03:58,920
Speaker 1: this budget that we're going to change things, both for

80
00:03:59,000 --> 00:04:03,200
Speaker 1: taxpayers and for welfare recipients. So for taxpayers, the tax

81
00:04:03,360 --> 00:04:05,880
Speaker 1: thresholds for income tax were due to rise and line

82
00:04:05,920 --> 00:04:09,400
Speaker 1: with inflation. If that doesn't happen, everyone's got well not everyone,

83
00:04:09,400 --> 00:04:11,880
Speaker 1: but eighteen million households are going to be paying more

84
00:04:11,960 --> 00:04:15,520
Speaker 1: tax from January. There's good news though for pensioners. They

85
00:04:15,560 --> 00:04:19,600
Speaker 1: were due to get their inflation linked increase delayed after

86
00:04:19,720 --> 00:04:22,240
Speaker 1: January to later in the year. They actually will get

87
00:04:22,240 --> 00:04:25,360
Speaker 1: their inflation linked increase in January if there isn't a budget.

88
00:04:25,800 --> 00:04:28,839
Speaker 1: But all of this presents the same problem that France

89
00:04:28,880 --> 00:04:31,040
Speaker 1: has had since the middle of last year. It's budget

90
00:04:31,080 --> 00:04:33,800
Speaker 1: death as it is too large for EU budget rules,

91
00:04:33,800 --> 00:04:36,520
Speaker 1: but also to be able to convince markets, and we've

92
00:04:36,520 --> 00:04:40,760
Speaker 1: seen France's international borrowing costs rise as a result. Part

93
00:04:40,800 --> 00:04:42,800
Speaker 1: of the issue now has to be is they need

94
00:04:42,839 --> 00:04:45,200
Speaker 1: to come up with a credible fiscal plan for the

95
00:04:45,240 --> 00:04:48,120
Speaker 1: country so as to cam the fears that exist on

96
00:04:48,160 --> 00:04:51,440
Speaker 1: the markets. And the rise in borrowing costs has been moderate,

97
00:04:51,680 --> 00:04:54,160
Speaker 1: hasn't got to quite extremes yet, but it sets up

98
00:04:54,160 --> 00:04:56,440
Speaker 1: a huge task for whoever's going to take over after

99
00:04:56,480 --> 00:04:59,880
Speaker 1: Michel Bagni, if indeed he is forced to resign, to

100
00:05:00,000 --> 00:05:02,200
Speaker 1: whether or not they can put together the plan and

101
00:05:02,240 --> 00:05:05,159
Speaker 1: achieve something that a man who was legendary for his

102
00:05:05,240 --> 00:05:07,240
Speaker 1: negotiation skills, wasn't able.

103
00:05:07,040 --> 00:05:09,080
Speaker 2: To well, we are waiting to hear from the National

104
00:05:09,120 --> 00:05:12,719
Speaker 2: Assembly about the results of that vote. We will bring

105
00:05:12,760 --> 00:05:15,440
Speaker 2: that to you imminently as we do get the results. Stephen,

106
00:05:15,760 --> 00:05:18,120
Speaker 2: what about other names that at this point have emerged

107
00:05:18,160 --> 00:05:20,080
Speaker 2: to take over as prime minister? What can you tell

108
00:05:20,120 --> 00:05:22,320
Speaker 2: us there, Hi?

109
00:05:22,360 --> 00:05:24,760
Speaker 1: Michel Varnier ruled himself out in an interview on French

110
00:05:24,800 --> 00:05:27,360
Speaker 1: television last night, which is important because it had been

111
00:05:27,400 --> 00:05:30,880
Speaker 1: something that had been speculated that perhaps an annual macron

112
00:05:30,960 --> 00:05:33,120
Speaker 1: might just say we'll give it another go. By the way,

113
00:05:33,120 --> 00:05:35,919
Speaker 1: the last time this happened when the only time since

114
00:05:36,080 --> 00:05:38,240
Speaker 1: the current constitution has been in force in France, which

115
00:05:38,240 --> 00:05:40,799
Speaker 1: is since nineteen fifty eight, the only time it's happened

116
00:05:40,800 --> 00:05:42,800
Speaker 1: that a government has lost a vote of no confidence

117
00:05:42,839 --> 00:05:44,000
Speaker 1: was in nineteen sixty two.

118
00:05:44,880 --> 00:05:47,440
Speaker 2: Stephen, I'm sorry to cut you off. We're getting again,

119
00:05:47,480 --> 00:05:50,520
Speaker 2: We're getting a result right now. The French government falls

120
00:05:50,520 --> 00:05:54,000
Speaker 2: after no confidence vote in Parliament. The French no commindant's

121
00:05:54,000 --> 00:05:56,400
Speaker 2: motion passes with three hundred and thirty one votes. Two

122
00:05:56,440 --> 00:05:59,800
Speaker 2: hundred and eighty eight were needed, not too surprising given

123
00:06:00,080 --> 00:06:02,520
Speaker 2: how closely you followed this, but what's your immediate reaction.

124
00:06:04,600 --> 00:06:06,960
Speaker 1: I mean, look, it means there wasn't any defections. Michelle

125
00:06:07,000 --> 00:06:10,400
Speaker 1: Barnier's call for responsibility doesn't seem to have won over

126
00:06:10,440 --> 00:06:12,640
Speaker 1: any of the MPs he was hoping. He was particularly

127
00:06:12,640 --> 00:06:16,360
Speaker 1: targeting the center left Party, the Socialist Party, who've been

128
00:06:16,360 --> 00:06:19,800
Speaker 1: in government in France many times in recent history. The

129
00:06:19,880 --> 00:06:22,719
Speaker 1: question of whether or not some of those MPs might

130
00:06:23,200 --> 00:06:26,240
Speaker 1: be willing to abstain, for example, from this vote to

131
00:06:26,279 --> 00:06:28,960
Speaker 1: try and save the government. He doesn't seem to have

132
00:06:29,000 --> 00:06:32,000
Speaker 1: convinced them with this message. That's the number in and

133
00:06:32,040 --> 00:06:34,680
Speaker 1: around what we expected, because it's basically if you add

134
00:06:34,720 --> 00:06:37,360
Speaker 1: together the Left Ring Alliance and Marion Lea Penn's far

135
00:06:37,440 --> 00:06:40,479
Speaker 1: right National Rally, those parties put together give us that

136
00:06:40,640 --> 00:06:42,960
Speaker 1: total of in and around three hundred and thirty. So

137
00:06:43,000 --> 00:06:45,599
Speaker 1: it looks like that they didn't manage to convince anyone

138
00:06:45,680 --> 00:06:49,039
Speaker 1: to cross the line. It's a result that's pretty much

139
00:06:49,080 --> 00:06:52,640
Speaker 1: then in line with expectations, but now opens up the

140
00:06:52,760 --> 00:06:56,479
Speaker 1: question of what happens next. What will Emmanuel Macron do.

141
00:06:56,560 --> 00:06:58,880
Speaker 1: He's just landed back in France in the past few

142
00:06:58,880 --> 00:07:02,320
Speaker 1: minutes from visit to Saudi Arabia, where he was trying

143
00:07:02,320 --> 00:07:05,360
Speaker 1: to brush off a lot of these political questions at

144
00:07:05,360 --> 00:07:09,480
Speaker 1: home and continue on with international affairs to little avail

145
00:07:09,560 --> 00:07:11,679
Speaker 1: as everyone just wanted to ask him what he planned

146
00:07:11,720 --> 00:07:15,920
Speaker 1: to do after this vote went through. He had been

147
00:07:15,920 --> 00:07:18,840
Speaker 1: asked on many occasions whether or not he might resign,

148
00:07:19,200 --> 00:07:21,360
Speaker 1: and he says that's not an issue, it's not even

149
00:07:21,360 --> 00:07:23,160
Speaker 1: in question that he would do that. Of course, his

150
00:07:23,240 --> 00:07:26,440
Speaker 1: term runs till twenty twenty seven, so we now set

151
00:07:26,480 --> 00:07:30,440
Speaker 1: ourselves up for the timeline where the French President can

152
00:07:30,480 --> 00:07:33,440
Speaker 1: take as long as he likes to appoint a new government.

153
00:07:33,640 --> 00:07:35,480
Speaker 1: We don't think he's going to leave it that long,

154
00:07:35,880 --> 00:07:38,880
Speaker 1: but it does plunge us into a sort of political vacuum.

155
00:07:38,920 --> 00:07:41,480
Speaker 1: Now we'll have to have a caretaker government to keep

156
00:07:41,520 --> 00:07:43,960
Speaker 1: current affairs running, but it's going to make those big

157
00:07:44,040 --> 00:07:46,560
Speaker 1: challenges like dealing with the budget even more difficult.

158
00:07:46,800 --> 00:07:49,960
Speaker 3: Stephen, do we have a good idea of who would

159
00:07:50,200 --> 00:07:53,080
Speaker 3: likely be the next prime minister in what that new

160
00:07:53,080 --> 00:07:54,520
Speaker 3: government would look like.

161
00:07:56,920 --> 00:07:58,480
Speaker 1: We don't. There are a couple of names that have

162
00:07:58,480 --> 00:08:01,360
Speaker 1: been floated around, but it's not a specific list of

163
00:08:01,400 --> 00:08:04,440
Speaker 1: people that have been floated. You could imagine that Emmanuel

164
00:08:04,520 --> 00:08:07,120
Speaker 1: Macron would try and pick from, if not his own

165
00:08:07,160 --> 00:08:10,440
Speaker 1: political family, those who've already said that they would ally

166
00:08:10,560 --> 00:08:13,160
Speaker 1: with him. There had been a question before Michel Barnier

167
00:08:13,240 --> 00:08:14,920
Speaker 1: was picked as to whether he might be able to

168
00:08:15,280 --> 00:08:18,560
Speaker 1: pick a politician from the Socialist Party, that center left

169
00:08:18,600 --> 00:08:21,640
Speaker 1: party and thus bring them into this center alliance that

170
00:08:21,680 --> 00:08:24,960
Speaker 1: he was trying to create. But they couldn't agree between

171
00:08:25,000 --> 00:08:27,720
Speaker 1: the left wing parties on the same candidate that Emmanuel

172
00:08:27,760 --> 00:08:30,520
Speaker 1: Macron want wanted. That was Bonno Kaznov, who's a former

173
00:08:30,960 --> 00:08:33,360
Speaker 1: interior minister. He was the one who had been mentioned

174
00:08:33,559 --> 00:08:36,040
Speaker 1: last time around. This was in the discussions that led

175
00:08:36,120 --> 00:08:38,959
Speaker 1: up to Michel Barnier being picked. But the names that

176
00:08:39,000 --> 00:08:41,960
Speaker 1: are out there now are in the realm of speculation.

177
00:08:42,360 --> 00:08:46,560
Speaker 1: There's no rallied support around someone. There's no obvious candidate

178
00:08:46,600 --> 00:08:49,640
Speaker 1: for who would take over, because the challenge facing the

179
00:08:49,679 --> 00:08:52,240
Speaker 1: person who takes on that they have the same parliamentary

180
00:08:52,280 --> 00:08:55,120
Speaker 1: match to deal with. Michel Barnier was dealt a very

181
00:08:55,160 --> 00:08:58,520
Speaker 1: difficult hand. He didn't have a majority in parliament. He

182
00:08:58,600 --> 00:09:01,040
Speaker 1: did his best to try and build a way of working.

183
00:09:01,240 --> 00:09:03,360
Speaker 1: He always said that he was leaving it to parliament

184
00:09:03,400 --> 00:09:06,640
Speaker 1: to be able to legislate and negotiate on important matters.

185
00:09:06,880 --> 00:09:09,720
Speaker 1: That's failed. You have to ask who would be brave

186
00:09:09,840 --> 00:09:12,600
Speaker 1: enough to step into those shoes, because it's a pretty

187
00:09:12,679 --> 00:09:14,160
Speaker 1: nasty hand of cards to be hand them.

188
00:09:14,280 --> 00:09:16,680
Speaker 2: That's exactly where I want to go. We're getting some

189
00:09:17,080 --> 00:09:22,240
Speaker 2: commentary from France unbowed lawmaker Mattil Panaut, who says that quote,

190
00:09:22,280 --> 00:09:26,199
Speaker 2: finally the Barnier government has fallen along with its violent budget.

191
00:09:26,440 --> 00:09:30,400
Speaker 2: Today is a historic day. What does a budget look

192
00:09:30,520 --> 00:09:33,000
Speaker 2: like in France after this process?

193
00:09:35,120 --> 00:09:37,120
Speaker 1: Well, look, we go into this situation where we're going

194
00:09:37,120 --> 00:09:40,319
Speaker 1: to be going month to month from January. There's very

195
00:09:40,320 --> 00:09:42,760
Speaker 1: little hope that even if a government was formed tomorrow

196
00:09:42,760 --> 00:09:45,280
Speaker 1: that they would be able to resuscitate this current budget

197
00:09:45,320 --> 00:09:48,719
Speaker 1: plan and actually get anything in place by the end

198
00:09:48,760 --> 00:09:50,800
Speaker 1: of the year. So either way, when it comes to

199
00:09:50,840 --> 00:09:53,400
Speaker 1: the end the thirty first of December, we're rolling into

200
00:09:53,440 --> 00:09:57,760
Speaker 1: this suppose minimum service French state that's going to be

201
00:09:57,800 --> 00:10:00,880
Speaker 1: in place from January of next year, and that's going

202
00:10:00,920 --> 00:10:03,800
Speaker 1: to bring back in those questions around tax rises for

203
00:10:03,880 --> 00:10:06,679
Speaker 1: a lot of households who are paying income tax, those

204
00:10:06,800 --> 00:10:09,360
Speaker 1: rises for pensions as well, and there were specific things

205
00:10:09,440 --> 00:10:12,280
Speaker 1: like extra financial aid for farmers which now won't be

206
00:10:12,360 --> 00:10:15,080
Speaker 1: paid out because that won't go into the budget bill.

207
00:10:15,160 --> 00:10:18,080
Speaker 1: So the next immediate step is that there will be

208
00:10:18,200 --> 00:10:20,400
Speaker 1: a motion that will need to be passed in Parliament

209
00:10:20,720 --> 00:10:25,280
Speaker 1: to I suppose activate this temporary measures to keep the

210
00:10:25,600 --> 00:10:28,320
Speaker 1: state running the lights on, if you will. There's not

211
00:10:28,360 --> 00:10:31,880
Speaker 1: expected to be any major opposition to that because no

212
00:10:32,040 --> 00:10:35,040
Speaker 1: French politician wants to be responsible for, you know, no

213
00:10:35,120 --> 00:10:38,680
Speaker 1: welfare payments being paid early next year, So there's not

214
00:10:38,720 --> 00:10:41,400
Speaker 1: an expectation that we will have anything but this month

215
00:10:41,400 --> 00:10:45,439
Speaker 1: to month situation operating from January with a larger budget

216
00:10:45,440 --> 00:10:47,800
Speaker 1: deficit and with the pressure that's going to put on

217
00:10:47,840 --> 00:10:50,400
Speaker 1: France's borrowing costs and international markets as well.

218
00:10:50,559 --> 00:10:53,640
Speaker 2: We're speaking with Stephen Carrol, Bloomberg Radio Daybreak Europe anchor,

219
00:10:53,720 --> 00:10:56,840
Speaker 2: joining us from our Paris bureau. Stephen Carroll has about

220
00:10:56,840 --> 00:11:01,280
Speaker 2: a decade of experience covering French politics working for France

221
00:11:01,320 --> 00:11:03,920
Speaker 2: twenty four TV in Paris. I do also want to

222
00:11:03,920 --> 00:11:07,280
Speaker 2: bring in Steven Englander, global head G ten x FX

223
00:11:07,280 --> 00:11:10,440
Speaker 2: research at Standard Chartered Bank. He joined us from New York.

224
00:11:11,280 --> 00:11:14,720
Speaker 2: Steven Englander talking a little bit about the market reaction

225
00:11:14,800 --> 00:11:17,400
Speaker 2: here French bond future is now pairing an earlier advance.

226
00:11:17,440 --> 00:11:19,920
Speaker 2: After the vote result, the europaired gains to trade little

227
00:11:20,000 --> 00:11:24,360
Speaker 2: change that around a dollar five. How are you looking

228
00:11:24,400 --> 00:11:27,079
Speaker 2: at market reaction here? What's the trade?

229
00:11:27,880 --> 00:11:32,040
Speaker 4: Well, I don't think that there's any immediate trade. We

230
00:11:32,080 --> 00:11:35,719
Speaker 4: started seeing French freads widen around the middle of November.

231
00:11:37,160 --> 00:11:40,360
Speaker 4: The euro has probably about a percent lower than it

232
00:11:40,400 --> 00:11:45,400
Speaker 4: would have been absent you know, this issue. I think

233
00:11:45,440 --> 00:11:49,920
Speaker 4: the last few days the market has reconciled itself to

234
00:11:50,080 --> 00:11:53,680
Speaker 4: a kind of very much a caretaker government. But also

235
00:11:54,640 --> 00:11:57,400
Speaker 4: you know, with what the other Steve mentioned, which is

236
00:11:57,400 --> 00:12:02,000
Speaker 4: that the budget itself is kind of an austerity budget

237
00:12:02,840 --> 00:12:06,839
Speaker 4: because nothing's indexed in nominal terms. It's all the same

238
00:12:07,320 --> 00:12:10,640
Speaker 4: level of spending, so it's a lower real spending. So

239
00:12:10,800 --> 00:12:15,880
Speaker 4: from from a market perspective, this isn't a disaster right now.

240
00:12:16,720 --> 00:12:19,960
Speaker 4: If it does become a political crisis, like even deeper,

241
00:12:20,240 --> 00:12:22,840
Speaker 4: or if it spills over to the rest of Europe,

242
00:12:22,880 --> 00:12:27,199
Speaker 4: that would become much more intense. And you know, as

243
00:12:27,200 --> 00:12:30,280
Speaker 4: we've seen here, typically these things get resolved because one

244
00:12:30,320 --> 00:12:33,640
Speaker 4: side or another decides that it's taking a political beating

245
00:12:33,840 --> 00:12:38,720
Speaker 4: being seen as responsible for you know, whatever, checks don't

246
00:12:38,720 --> 00:12:39,520
Speaker 4: go out or whatever.

247
00:12:40,400 --> 00:12:42,680
Speaker 3: Stephn Engler I was going to follow up and ask

248
00:12:42,880 --> 00:12:46,760
Speaker 3: does this affect ECB policy at all? Is the Central

249
00:12:46,760 --> 00:12:49,800
Speaker 3: Bank thinking about kind of this uncertainty around what happens

250
00:12:49,840 --> 00:12:50,960
Speaker 3: next with the French budget.

251
00:12:53,000 --> 00:12:55,960
Speaker 4: I think the ECB is more you know, say, cognizant

252
00:12:55,960 --> 00:12:58,840
Speaker 4: of these issues right there. You know, we just hurt

253
00:12:58,920 --> 00:13:03,160
Speaker 4: Powell sort of, you know, drawing strict lines between fiscal

254
00:13:03,400 --> 00:13:07,640
Speaker 4: and and you know, government and the Central Bank. I

255
00:13:07,640 --> 00:13:10,360
Speaker 4: don't think the ECB has those strict lines going back

256
00:13:10,400 --> 00:13:13,760
Speaker 4: to the European fiscal crisis, so you know, maybe a

257
00:13:13,760 --> 00:13:16,720
Speaker 4: little more likely to cut to make things easier. But

258
00:13:16,800 --> 00:13:19,480
Speaker 4: I think initially at least their focus will be on

259
00:13:19,600 --> 00:13:23,760
Speaker 4: trying to prevent any kind of spillover into the rest

260
00:13:23,760 --> 00:13:26,640
Speaker 4: of Europe and reassure markets that they're ready to take

261
00:13:26,679 --> 00:13:28,040
Speaker 4: action if anything would happen.

262
00:13:28,240 --> 00:13:30,199
Speaker 2: Steven England or when you say spillover, do you mean

263
00:13:30,280 --> 00:13:33,360
Speaker 2: political spillover? Do you mean spillover when it comes to markets?

264
00:13:33,400 --> 00:13:34,040
Speaker 2: How do you see it?

265
00:13:35,120 --> 00:13:37,560
Speaker 4: Well? I think in the first instance, if we start

266
00:13:37,600 --> 00:13:41,960
Speaker 4: seeing Italian spreads going up, and you know, Portuguese spreads

267
00:13:42,000 --> 00:13:45,400
Speaker 4: going up, that's exactly what they don't want and what

268
00:13:45,440 --> 00:13:47,920
Speaker 4: they would react to. Initially, it's a little bit more

269
00:13:47,960 --> 00:13:51,959
Speaker 4: delicate to try and intervene on French spreads when it's

270
00:13:51,960 --> 00:13:54,440
Speaker 4: a French political crisis. But for the rest of Europe,

271
00:13:54,520 --> 00:13:57,000
Speaker 4: I think their role is unambiguous.

272
00:13:57,160 --> 00:13:59,400
Speaker 2: I want to bring back in Stephen Carroll, who's in

273
00:13:59,480 --> 00:14:03,760
Speaker 2: our pair of bureau. The far left France Unbound party

274
00:14:03,800 --> 00:14:07,440
Speaker 2: calls for Emmanuel Macron to resign. I know you've been

275
00:14:07,440 --> 00:14:09,760
Speaker 2: getting caught up just in the last few minutes, Stephen.

276
00:14:10,240 --> 00:14:12,560
Speaker 2: What sticks out to you as far as other names

277
00:14:12,559 --> 00:14:15,360
Speaker 2: that potentially have emerged, or what the political future of

278
00:14:15,400 --> 00:14:16,000
Speaker 2: Macron is.

279
00:14:18,040 --> 00:14:20,720
Speaker 1: I mean, look, Emmanuel Macron has brushed off any suggestion

280
00:14:20,800 --> 00:14:23,000
Speaker 1: that he will resign. There's no way that he can

281
00:14:23,040 --> 00:14:26,200
Speaker 1: be forced to. This vote doesn't affect his position in power,

282
00:14:26,280 --> 00:14:30,000
Speaker 1: and he's due to stay in office until twenty twenty seven.

283
00:14:30,040 --> 00:14:32,640
Speaker 1: A person who very keenly would like him to resign,

284
00:14:32,680 --> 00:14:34,960
Speaker 1: and we've seen that on the decision that she has

285
00:14:35,080 --> 00:14:39,240
Speaker 1: made in supporting this no confidence motion is Marie Lepenn,

286
00:14:39,480 --> 00:14:41,720
Speaker 1: the far right candor's course was the person who went

287
00:14:41,800 --> 00:14:45,320
Speaker 1: up against Macron the last two presidential elections. Her support

288
00:14:45,360 --> 00:14:49,400
Speaker 1: has been growing slowly and the margin by which Emmanuel

289
00:14:49,440 --> 00:14:52,360
Speaker 1: Macron defeated her in the last presidential elections, was much

290
00:14:52,360 --> 00:14:55,520
Speaker 1: smaller than in twenty seventeen. So she would very much

291
00:14:55,680 --> 00:14:58,320
Speaker 1: like for there to be an early presidential election to

292
00:14:58,320 --> 00:15:00,880
Speaker 1: get a chance for her to be a to get

293
00:15:00,920 --> 00:15:04,720
Speaker 1: a shot at the presidency. Now it's not unusual that

294
00:15:04,760 --> 00:15:06,720
Speaker 1: we'll have that same call from the far left. They're

295
00:15:06,760 --> 00:15:09,560
Speaker 1: actually one of the biggest groups in Parliament, so they

296
00:15:09,720 --> 00:15:12,360
Speaker 1: know that they have also significant support and that's been

297
00:15:12,800 --> 00:15:16,240
Speaker 1: the story of how politics has evolved under Emmanuel Macron

298
00:15:16,480 --> 00:15:19,400
Speaker 1: in poos who've seen greater support for far right and

299
00:15:19,560 --> 00:15:22,680
Speaker 1: far left parties as a result. Some of those other

300
00:15:22,760 --> 00:15:24,880
Speaker 1: names that you mentioned for prime minister, I mentioned Bernard

301
00:15:24,920 --> 00:15:27,160
Speaker 1: Casnov a minute ago, the former socialist prime minister and

302
00:15:27,200 --> 00:15:30,440
Speaker 1: Interior minister as well. Perhaps the left might be able

303
00:15:30,480 --> 00:15:33,160
Speaker 1: to agree on him perhaps forming a government and that

304
00:15:33,200 --> 00:15:37,320
Speaker 1: would open up the left side of the Parliament to

305
00:15:37,320 --> 00:15:41,360
Speaker 1: be able to perhaps form a centrist coalition. Other ones

306
00:15:41,400 --> 00:15:43,360
Speaker 1: that we have been talking about is the likes of

307
00:15:43,400 --> 00:15:46,040
Speaker 1: Francois Bairrou, who is a centrist politician and early supporter

308
00:15:46,080 --> 00:15:48,600
Speaker 1: of Emmanuel Macron way back when he ran for presidents

309
00:15:48,640 --> 00:15:51,240
Speaker 1: the first time around. As well, quite a similar profile

310
00:15:51,240 --> 00:15:53,280
Speaker 1: in some ways to Michelle Bannier. He's been around a

311
00:15:53,280 --> 00:15:55,520
Speaker 1: long time in French politics. He has a certain amount

312
00:15:55,520 --> 00:15:57,640
Speaker 1: of respect for the positions that he's had as well,

313
00:15:57,800 --> 00:15:59,800
Speaker 1: and perhaps he could be someone who could draw people

314
00:15:59,840 --> 00:16:02,440
Speaker 1: to either. But he's not really outside of the current

315
00:16:02,440 --> 00:16:05,280
Speaker 1: alliance that mac Grown's in. You think this because he's

316
00:16:05,280 --> 00:16:08,840
Speaker 1: already tried Michelle Bangiy someone who's already out of domestic politics,

317
00:16:08,840 --> 00:16:10,840
Speaker 1: that perhaps he might be looking for someone a little

318
00:16:10,880 --> 00:16:13,640
Speaker 1: bit bigger next time around that'll pull in new votes

319
00:16:13,640 --> 00:16:16,000
Speaker 1: and new supports, so that'll be able to create some

320
00:16:16,080 --> 00:16:17,600
Speaker 1: currency in parliament as well.

321
00:16:17,960 --> 00:16:19,720
Speaker 2: Stephen Carroll, we're gonna have to let you go. I

322
00:16:19,720 --> 00:16:21,040
Speaker 2: know you've got a busy night ahead of you. We

323
00:16:21,040 --> 00:16:22,960
Speaker 2: definitely appreciate you taking the time and it joining us.

324
00:16:22,960 --> 00:16:26,640
Speaker 2: That's Stephen Carroll of a Bloomberg Daybreak Europe. He's an

325
00:16:26,680 --> 00:16:29,880
Speaker 2: anchor for Bloomberg Radio, joining us from Paris. So do

326
00:16:29,880 --> 00:16:31,520
Speaker 2: you want to get back to Stephen England or Global

327
00:16:31,600 --> 00:16:34,680
Speaker 2: head g TENFX Research at Standard Charter Bank, joining us

328
00:16:34,800 --> 00:16:38,360
Speaker 2: from New York. The front French stocks closing in on

329
00:16:38,360 --> 00:16:41,960
Speaker 2: their worst year since twenty ten, although the CAC forty

330
00:16:41,960 --> 00:16:44,440
Speaker 2: today seemed to shrug off this news. It rose seven

331
00:16:44,480 --> 00:16:46,720
Speaker 2: tenths of one percent. Can you talk about the equity

332
00:16:46,720 --> 00:16:48,400
Speaker 2: market reaction around this at all?

333
00:16:50,680 --> 00:16:53,080
Speaker 4: Well, you know, I think there's just a lot of

334
00:16:53,160 --> 00:16:56,680
Speaker 4: uncertainty there, and you know, obviously there will be pockets

335
00:16:56,680 --> 00:17:01,320
Speaker 4: where maybe they were, you know, expecting some help from

336
00:17:01,320 --> 00:17:03,840
Speaker 4: the budget and that's not going to come. But I

337
00:17:03,880 --> 00:17:08,080
Speaker 4: think it's more broad macro uncertainty than there is any

338
00:17:08,160 --> 00:17:12,800
Speaker 4: you know, specific equity market risk. What we could see

339
00:17:12,880 --> 00:17:17,000
Speaker 4: is is, you know, right now the turnover budget, it's

340
00:17:17,000 --> 00:17:19,680
Speaker 4: sort of an austerity budget if it does turn out

341
00:17:19,720 --> 00:17:23,359
Speaker 4: that they say reached an agreement, but it's much more expansionary.

342
00:17:24,400 --> 00:17:26,679
Speaker 4: You know, we could see an equity market reaction, but

343
00:17:26,720 --> 00:17:30,000
Speaker 4: we could also see markets looking at the fiscal situation

344
00:17:30,200 --> 00:17:31,600
Speaker 4: and being a little concern.

345
00:17:32,600 --> 00:17:37,240
Speaker 3: What about the outlook here for US versus Europe. We've

346
00:17:37,240 --> 00:17:41,240
Speaker 3: obviously been watching europaroity. We're not there quite yet, but

347
00:17:41,240 --> 00:17:44,200
Speaker 3: there's a lot of talk about the US dollar continuing

348
00:17:44,240 --> 00:17:49,080
Speaker 3: to strengthen against other countries, other regions, including Europe. What

349
00:17:49,160 --> 00:17:52,040
Speaker 3: are you kind of watching levels wise, and does this

350
00:17:52,520 --> 00:17:57,280
Speaker 3: news in France kind of change the narrative at all?

351
00:17:57,440 --> 00:18:01,120
Speaker 4: Well, dook, I think it does put U P. I mean,

352
00:18:01,320 --> 00:18:04,360
Speaker 4: it obviously has put parody a little bit closer, if anything.

353
00:18:04,480 --> 00:18:08,120
Speaker 4: What's surprising, you know, my guess is that we saw

354
00:18:08,320 --> 00:18:11,080
Speaker 4: one percent, maybe slightly less three quarters of a percent

355
00:18:11,760 --> 00:18:15,000
Speaker 4: impact on the Euro. So the market is seeing it

356
00:18:15,040 --> 00:18:16,960
Speaker 4: as an issue. It's not really seeing it as a

357
00:18:17,000 --> 00:18:22,760
Speaker 4: market crisis. If something were to develop that really led

358
00:18:22,840 --> 00:18:28,080
Speaker 4: to prolonged political uncertainty, that would be much harsher. But

359
00:18:28,200 --> 00:18:30,879
Speaker 4: I you know, till now, the market is sort of

360
00:18:31,359 --> 00:18:33,440
Speaker 4: seeing it as a bad but not as a as

361
00:18:33,440 --> 00:18:34,119
Speaker 4: a very bad

362
00:18:35,040 --> 00:18:38,040
Speaker 2: Stephen England are global head G ten FX Research at

363
00:18:38,040 --> 00:18:40,520
Speaker 2: Standard Charter Bank, joining us from New York