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Speaker 1: Bloomberg Audio Studios, podcasts, radio news.

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Speaker 2: The headlines in France on Monday after a snap election,

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Speaker 2: La claque, the slap, it's crazy and now what do

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Speaker 2: we do? French voters shocked the world on Sunday by

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Speaker 2: rejecting Marine Lapin's efforts to see her far right National

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Speaker 2: Front party take control of France's parliament. The party's leader,

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Speaker 2: Jordan Bardella, said the result deprived the French of policies

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Speaker 2: that would fix the country.

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Speaker 3: So soir c ericto jette lacrance don madlos.

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Speaker 2: Instead, it was the far left that came out on

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Speaker 2: top in the second and final round of a snap election.

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Speaker 2: That coalition's leader, Jean Luke Melanchon, said the French had

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Speaker 2: voted with their conscience and rejected the worst case scenario.

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Speaker 4: Not at not for Purple Clema.

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Speaker 2: This is tricky for French President Emmanuel Macron, whose Renaissance

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Speaker 2: Party came in second. Macron has asked the current Prime Minister,

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Speaker 2: gabrielll la Tal to stay on for now instead of resigning.

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Speaker 2: Melanchon has demanded that a left winger should replace him.

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Speaker 2: The president DUIs Chantline he had met Rousset defect Santante Dora.

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Speaker 2: According to Lionel Laurent, a columnist for Bloomberg Opinion, France

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Speaker 2: now faces a level of political division that is virtually

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Speaker 2: unprecedented in the history of the Fifth Republic.

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Speaker 4: It was a big shock. It was a big shock

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Speaker 4: for the French media. This is not the international media

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Speaker 4: getting it wrong. This was a big shock. I mean,

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Speaker 4: it really is a big moment.

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Speaker 2: Lionelle says it could be weeks before we see any

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Speaker 2: sort of coalition government, which means Europe's second largest economy

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Speaker 2: now faces a world of unknowns.

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Speaker 4: There is a rejection and repudiation of million penn So

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Speaker 4: clearly the Republican front worked, but no one quite knows

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Speaker 4: what the French ship voted for. So that's the big

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Speaker 4: question mark.

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Speaker 2: The surprise and the disorder in France stands in stark

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Speaker 2: contrast with what's playing out across the channel in the

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Speaker 2: UK Parliament or return on Tuesday with a new Prime Minister,

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Speaker 2: Kir Starmer and a new party in charge after fourteen

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Speaker 2: years of Conservative leadership.

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Speaker 3: You campaign for it, you vought for it, you've voted

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Speaker 3: for it, and now it has arrived. Change begins now.

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Speaker 2: I'm David Gerra and this is the big take from

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Speaker 2: Bloomberg News Today on the show, the impact of the

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Speaker 2: elections in France and the UK and the significance of

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Speaker 2: a turn leftward, what it means for markets, geo politics,

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Speaker 2: and the global economy. President Emmanuel Macron's surprise decision to

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Speaker 2: call a snap election didn't result in as dire a

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Speaker 2: situation as had been predicted, but it didn't result in

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Speaker 2: a clear outcome either. According to Bloomberg opinion columnist Lionel Laurent.

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Speaker 4: So, the final count is in first place, we have

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Speaker 4: the left wing Popular Front block. They got a one

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Speaker 4: hundred and eighty two seats. Bear in mind the golden

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Speaker 4: magic number is two to eight nine for an absolute

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Speaker 4: majority in the French Parliament. And Lepenn's far right group,

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Speaker 4: which was tipped to really come in top, will become

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Speaker 4: the biggest group, is in third place with only one

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Speaker 4: four three seats. That was the big shock. And then

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Speaker 4: in the middle second place, Emmanuel McCall's centrist block has

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Speaker 4: done better than expected. So the messages nobody has an

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Speaker 4: absolute majority, Leonel.

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Speaker 2: President Macron's decision to call for a snap election was

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Speaker 2: characterized as a gamble. Did that game pay off.

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Speaker 4: So it did and it didn't. Basically, what has paid

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Speaker 4: off is that clearly the Republican Front, this willingness to

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Speaker 4: choose the voters, to choose the lesser of two evils

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Speaker 4: when it comes to keeping Marine le Penn out of

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Speaker 4: power has worked. Matcorn has, let's say, saved his centrist movement.

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Speaker 4: That said, though it was clearly driven by tactical voting,

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Speaker 4: there was a lot of dependency on the left to

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Speaker 4: help save Macau's movement, and he as a character, as

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Speaker 4: a leader is clearly weakened. I mean, his Centrist block

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Speaker 4: initially had an absolute majority, but that's been withering over

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Speaker 4: the years and it's lost loads of seats. So clearly,

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Speaker 4: whoever leads the Centrist block in the future, it's not

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Speaker 4: going to be Macon and they've i think won some

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Speaker 4: time to choose a new leader and to bounce back

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Speaker 4: from this. So I would say it's half paid off.

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Speaker 2: What change between the first round of voting and the second.

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Speaker 2: It came out of the first round of the far right

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Speaker 2: had this very sizable, solid lead. What happened between then

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Speaker 2: and the second vote.

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Speaker 4: So just to get through the tactical part, So essentially

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Speaker 4: in several hundred districts. The left wing block and Mackhorn's

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Speaker 4: block essentially agreed to respectively pull out their own candidate

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Speaker 4: to not split the vote. It's not a rare thing

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Speaker 4: in France. It's not a rare thing in many countries

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Speaker 4: to have people simply pull out of a race. But

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Speaker 4: the amount of districts where that took place, well over

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Speaker 4: two hundred, did, I think create a situation where we're

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Speaker 4: wondering will voters actually turn out to vote because these

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Speaker 4: parties are so different. You'll really be holding your nose

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Speaker 4: to a great degree, so will people get up off

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Speaker 4: the couch. The other thing is that the French, this

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Speaker 4: two round system really shows its worth in situations like this.

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Speaker 4: The first round vote, you vote with your heart, you

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Speaker 4: express anger, the message is sent. But the French basically

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Speaker 4: opened the door and peered into whatever you want to

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Speaker 4: call it, the abyss, the pit of the sarlac. They

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Speaker 4: took a look at what the reality of a La

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Speaker 4: penn Win would be and they said no.

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Speaker 2: Last time you and I spoke a few weeks back,

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Speaker 2: you told me that this decision to call a snap

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Speaker 2: election was one that was born out of frustration with

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Speaker 2: government dysfunction. It strikes me when you look at the

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Speaker 2: political landscape now in France that dysfunction really hasn't gone away.

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Speaker 4: Yes, I think we just have to accept that a

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Speaker 4: new chapter is opening and it is not a peaceful

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Speaker 4: one where we've closed the door on La Pen and

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Speaker 4: opened the door on some concord at that's stable and

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Speaker 4: long lasting. The first task is to actually build the coalition.

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Speaker 4: There is some hard work. It'll take time to build

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Speaker 4: that government. And then a few months down the line,

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Speaker 4: having tried to find some kind of common policies that

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Speaker 4: people can agree on, which will frankly be very modest,

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Speaker 4: maybe some tax increases, maybe some kind of watering down

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Speaker 4: in Micael's reforms, it'll come time to do a budget

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Speaker 4: and that is going to be tough. That's going to

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Speaker 4: be where the cookie crumbles. So we are entering a

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Speaker 4: very volatile and fractious period to French politics. And don't

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Speaker 4: forget that the pen has not gone away. She will

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Speaker 4: have time now to become more competent and get ready

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Speaker 4: to govern and crucially constantly attack from the opposition benches

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Speaker 4: mac Horn and the parties that I'm sure she will

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Speaker 4: castigate as the elite who are stealing the votes of

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Speaker 4: the true French. So it's going to get ugly. But

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Speaker 4: I do think there is some value in having delayed

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Speaker 4: or deferred whatever La penn has in store for the French.

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Speaker 2: As we look ahead to the coming weeks, the coming months,

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Speaker 2: if we get the kind of paralysis and dysfunction that

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Speaker 2: you and I have been talking about, what are the

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Speaker 2: consequences going to be for the country.

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Speaker 4: Look, no one's expecting fireworks. France has deep seated issues.

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Speaker 4: It has a very high debt load, it has an

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Speaker 4: economy that's growing below the euro Area average, it's in

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Speaker 4: demographic decline, it has a productivity lag and innovation lag

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Speaker 4: with the US, and it clearly has a European leadership

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Speaker 4: role that is at risk. So all of these issues

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Speaker 4: are not going to be solved by a kind of

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Speaker 4: coalition government that's cobbled together from one day to the next.

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Speaker 4: That's not going to happen. But in terms of the

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Speaker 4: kind of management of the day to day, what can

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Speaker 4: we imagine there are going to be some pretty tough

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Speaker 4: discussions with Europe because that is the constraint. Financial markets

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Speaker 4: are not going to give France much room for maneuver

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Speaker 4: there will be a constant testing with European partners and

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Speaker 4: with markets as to what this government can do. So frankly,

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Speaker 4: I'm not expecting huge, ambitious policies and it may simply

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Speaker 4: be a question of how much extra can the government

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Speaker 4: spend to deliver some of the purchasing power gains that

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Speaker 4: voters want without causing a financial crisis.

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Speaker 2: After the break, we head across the Channel to unpack

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Speaker 2: election results in the United Kingdom and we look at

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Speaker 2: what France's gridlock and Britain shift left mean for Europe

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Speaker 2: and for the rest of the world. While the left's

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Speaker 2: victory in France came as a shock, in the UK,

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Speaker 2: the left leaning Labor Party was projected to prevail in

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Speaker 2: the most recent elections, and that's exactly what happened. It

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Speaker 2: was a big win for a party that suffered a

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Speaker 2: devastating defeat by the Conservatives under Boris Johnson just five

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Speaker 2: years ago. The UK Parliament is sitting Tuesday and the

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Speaker 2: new Labor leader, kir Starmer has already started outlining his

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Speaker 2: party's plans.

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Speaker 3: Today we start the next chapter, begin the work of change,

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Speaker 3: submission of national renewal and start to rebuild our country.

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Speaker 2: To dig into the results and what they mean for

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Speaker 2: the UK. I sat down with Stephanie Flanders, who runs

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Speaker 2: economics and government coverage at Bloomberg. She's also a co

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Speaker 2: host of the Bloomberg podcast Voter Noamics. I began by

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Speaker 2: asking her to break down the results of the vote

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Speaker 2: on July fourth.

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Speaker 1: First and foremost, it was just a massive kicking for

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Speaker 1: the Conservative Party, the biggest loss of seats of any

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Speaker 1: prime minister, in fact, of any party in history in

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Speaker 1: a UK election. Two hundred and fifty members of Parliament

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Speaker 1: lost their jobs, often in seats where they thought they

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Speaker 1: probably would have thought they'd be in there for life.

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Speaker 1: And I think, just to sort of crystallize it, fourteen

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Speaker 1: million people voted for Boris Johnson's Conservative Party. Barely five

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Speaker 1: years ago this election, that number was just seven million. Now,

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Speaker 1: Labour did very well out of that. It actually got

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Speaker 1: more than four hundred seats, nearly two thirds of the seats.

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Speaker 1: But it's interesting to note that it really only got

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Speaker 1: a third of the vote's cast and actually got not

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Speaker 1: that many more votes than in the last election. You

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Speaker 1: have a system with two main parties that have national coverage.

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Speaker 1: If one loses big the other wins big, even if

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Speaker 1: it's with a relatively small proportion of votes. And in

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Speaker 1: the end, what matters to us to the world is

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Speaker 1: that Keirs Stalmer's Prime Minister with an impregnable majority and

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Speaker 1: we shouldn't expect that to change for five years.

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Speaker 2: Should we insure with this as a leftward shift or

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Speaker 2: is this more just a rebuke of Boris Johnson? Is

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Speaker 2: it a swing left as you see.

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Speaker 1: In You know, I think the exceptional thing about the

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Speaker 1: last fourteen years of Conservative government is that they have

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Speaker 1: all felt like very different governments. You know, we had

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Speaker 1: five prime ministers, almost as many economic policies, business taxes

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Speaker 1: went down and then up, then down, then up. We

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Speaker 1: were in the European Union at the start of that period,

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Speaker 1: and then out. So I would say it's a move

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Speaker 1: to the left, very sort of slight moved to the

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Speaker 1: left at a time when many other countries in Europe

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Speaker 1: and potentially the US as well, have often been turning right.

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Speaker 1: This government's going to be a bit more oriented towards

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Speaker 1: investing in public services and a bit more tolerant of

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Speaker 1: increasing taxes at the margin. But the woman we have

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Speaker 1: coming in to be the first female Chancellor of the

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Speaker 1: Exchequer Treasury Secretary, used to work at the Bank of England.

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Speaker 1: She's pretty orthodox in her approach. Rachel Reeves, I think

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Speaker 1: the big change, more than anything else, will be not

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Speaker 1: the lurch to the left, but stability. You know, a

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Speaker 1: vote for a new party was in this case a

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Speaker 1: vote for stability after quite a lot of psychodrama and upheaval.

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Speaker 2: As we move from conservative leadership to labor leadership, what

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Speaker 2: does that mean for the country as a whole.

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Speaker 1: You're moving to a sort of traditional kind of labor leader.

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Speaker 1: Keir Starmer's sort of straight talking lawyer is not spend

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Speaker 1: a lifetime in politics. In fact, he only came into

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Speaker 1: Parliament about ten years ago. Less than that, in his

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Speaker 1: early fifties he was a lawyer. He'd run the Crown

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Speaker 1: Prosecution Service. So that's a bit like being the kind

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Speaker 1: of chief US Attorney. And there is no such thing

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Speaker 1: as Starmerism. It's not like his predecessor Jeremy Corbyn, whom

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Speaker 1: many people will remember. He wants to just get stuff done,

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Speaker 1: or at least that's what he's put across to people.

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Speaker 2: Stephanie, could you give us the lay of the land

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Speaker 2: and describe the many challenges this new labor government inherits.

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Speaker 2: What's the party's focus going to be on day one?

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Speaker 1: The focus has been throughout their campaign, and I think

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Speaker 1: most economists would say it's been in the right place.

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Speaker 1: Has been on growth, on the need to get Britain's

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Speaker 1: growth rate back up. If we had grown our same

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Speaker 1: at the long term average rate since two thousand and eight,

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Speaker 1: our economy would be forty percent bigger. That's how much

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Speaker 1: we fall and short. And it's true that lots of

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Speaker 1: countries have struggled after the global financial crisis, but by

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Speaker 1: and large we have done worse than many, and particularly

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Speaker 1: on a kind of per head basis in terms of

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Speaker 1: living standards. Our investment is among the lowest in the

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Speaker 1: G seven consistently, and yet partly as a result of

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Speaker 1: the lower growth and the pressures on population and on

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Speaker 1: the aging society. Taxes are actually the highest they've been

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Speaker 1: in seventy years, and you know, money's extremely tight, so

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Speaker 1: he's going to have to try and square that circle

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Speaker 1: whilst avoiding a big squeeze on public service spending, which

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Speaker 1: is otherwise coming down the track. And again that all

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Speaker 1: comes down to getting faster growth and higher investment crucially.

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Speaker 2: So we're focused on these two major parties. But we

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Speaker 2: did say one surprising result, the far right Reform Party

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Speaker 2: got fourteen percent of the vote. The party's leader, Nigel Faraj,

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Speaker 2: pretty divisive figure in British politics. What should we take

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Speaker 2: away from that.

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Speaker 1: Well, it's certainly true that Nigel Ferrage, this very controversial figure,

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Speaker 1: gets on quite well with Donald Trump, who'd originally said

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Speaker 1: he was going to not be a big part of

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Speaker 1: this election because he was more focused on the US.

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Speaker 1: He wanted to go and hang out in Mara Lago.

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Speaker 1: He decided once the election was called to take over

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Speaker 1: the party that he has helped to create, Reform UK

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Speaker 1: and has attracted an enormous amount of support explicitly from

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Speaker 1: disgruntled Conservative particularly the sort of anti immigrant side, anti

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Speaker 1: European side of the Conservative Party. So how the rump

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Speaker 1: Conservative Party decides to deal with him, deal with that party,

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Speaker 1: what lessons they draw ideologically from this is going to

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Speaker 1: be a big challenge for the Conservatives, although I should say,

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Speaker 1: you know, the interesting thing is we don't have to

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Speaker 1: care about the Conservatives for quite a long time and

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Speaker 1: their internal struggles, but it will certainly be interesting to

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Speaker 1: watch what happens to the right of the UK, who

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Speaker 1: are now out of power. Given this rise of nigerl Ferrage.

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Speaker 2: It's tempting to see the outcome of both the French

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Speaker 2: and the British elections as a rejection of extremism. As

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Speaker 2: President Joe Biden suggested in an interview with MSNBC on Monday,

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Speaker 2: Pras rejected extremism.

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Speaker 4: Democrats were rejected.

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Speaker 2: Here as well, But that might not be the best takeaway.

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Speaker 2: Nearly half of the world's population lives in countries holding

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Speaker 2: elections this year, and Stephanie and Lionelle say that the

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Speaker 2: results could serve as a wake up call of a

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Speaker 2: different sort for politicians running for reelection.

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Speaker 1: The overriding lesson that I see from looking at all

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Speaker 1: of these elections through this year is an anti incumbency

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Speaker 1: feeling in most places that are truly democratic. Obviously Russia

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Speaker 1: we've had very strong result for President Putin, but where

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Speaker 1: you have a vibrant and functioning democracy, voters have mostly

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Speaker 1: punished incumbents. You know, even in India, where Prime Minister

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Speaker 1: Modi was returned much less emphatically than expected. We saw

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Speaker 1: that with Milay in Argentina. I think the other way

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Speaker 1: in which we're definitely in line with others, is a

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Speaker 1: vote against inflation.

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Speaker 4: We have had an inflation shock in a lot of countries,

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Speaker 4: and that can really blow up a leader's record, which

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Speaker 4: seems otherwise great on paper when you look at the

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Speaker 4: jobless rate, when you look at economic growth, but when

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Speaker 4: people feel their real wages get squeezed, whether it's in

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Speaker 4: the US, whether it's in France, whether it's in the UK,

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Speaker 4: that really can change people's lives and it can change

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Speaker 4: the way people vote. And so I think that even

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Speaker 4: though we are exiting I guess the inflation shock, I

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Speaker 4: do think that there is a question that everyone needs

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Speaker 4: to ask, which is have we really learned the lessons

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Speaker 4: from this inflation shock? We sure we understand it? And

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Speaker 4: are we sure we know how to fight the next

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Speaker 4: one when it comes along.

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Speaker 1: Voters are looking at the cost of food, cost of energy,

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Speaker 1: cost of rent, other basics. They don't like it, and

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Speaker 1: they're punishing governments for it.

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Speaker 2: This is the big take from Bloomberg News. I'm David Gura.

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Speaker 2: Make sure to check out the latest voter Nomics podcast

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Speaker 2: on the French election featuring Jean Claude Trichet, the former

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Speaker 2: president of the European Central Bank. This episode was produced

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Speaker 2: by Julia Press and Jessica Beck. It was edited by

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Speaker 2: Aaron Edwards and Stacy Vanick Smith and fact check by

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Speaker 2: Adriana Tapia, Rff, Jalasho Perry, and Thomas lou It was

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Speaker 2: mixed by Robert Williams. Special thanks to Julia Manns and

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Speaker 2: Keith Coe. Our senior producers are Kim Giittleson and Naomi Shaven,

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Speaker 2: and our senior editor is Elizabeth Ponso. Nicole Beemster bor is.

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Speaker 2: Our executive producer Sage Bauman is Bloomberg's head of podcasts.

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Speaker 2: Thanks so much for listening. Please follow and review The

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Speaker 2: Big Take wherever you get your podcasts. It helps new

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Speaker 2: listeners find the show. We'll be back tomorrow.