Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: The headlines in France on Monday after a snap election,
Speaker 2: La claque, the slap, it's crazy and now what do
Speaker 2: we do? French voters shocked the world on Sunday by
Speaker 2: rejecting Marine Lapin's efforts to see her far right National
Speaker 2: Front party take control of France's parliament. The party's leader,
Speaker 2: Jordan Bardella, said the result deprived the French of policies
Speaker 2: that would fix the country.
Speaker 3: So soir c ericto jette lacrance don madlos.
Speaker 2: Instead, it was the far left that came out on
Speaker 2: top in the second and final round of a snap election.
Speaker 2: That coalition's leader, Jean Luke Melanchon, said the French had
Speaker 2: voted with their conscience and rejected the worst case scenario.
Speaker 4: Not at not for Purple Clema.
Speaker 2: This is tricky for French President Emmanuel Macron, whose Renaissance
Speaker 2: Party came in second. Macron has asked the current Prime Minister,
Speaker 2: gabrielll la Tal to stay on for now instead of resigning.
Speaker 2: Melanchon has demanded that a left winger should replace him.
Speaker 2: The president DUIs Chantline he had met Rousset defect Santante Dora.
Speaker 2: According to Lionel Laurent, a columnist for Bloomberg Opinion, France
Speaker 2: now faces a level of political division that is virtually
Speaker 2: unprecedented in the history of the Fifth Republic.
Speaker 4: It was a big shock. It was a big shock
Speaker 4: for the French media. This is not the international media
Speaker 4: getting it wrong. This was a big shock. I mean,
Speaker 4: it really is a big moment.
Speaker 2: Lionelle says it could be weeks before we see any
Speaker 2: sort of coalition government, which means Europe's second largest economy
Speaker 2: now faces a world of unknowns.
Speaker 4: There is a rejection and repudiation of million penn So
Speaker 4: clearly the Republican front worked, but no one quite knows
Speaker 4: what the French ship voted for. So that's the big
Speaker 4: question mark.
Speaker 2: The surprise and the disorder in France stands in stark
Speaker 2: contrast with what's playing out across the channel in the
Speaker 2: UK Parliament or return on Tuesday with a new Prime Minister,
Speaker 2: Kir Starmer and a new party in charge after fourteen
Speaker 2: years of Conservative leadership.
Speaker 3: You campaign for it, you vought for it, you've voted
Speaker 3: for it, and now it has arrived. Change begins now.
Speaker 2: I'm David Gerra and this is the big take from
Speaker 2: Bloomberg News Today on the show, the impact of the
Speaker 2: elections in France and the UK and the significance of
Speaker 2: a turn leftward, what it means for markets, geo politics,
Speaker 2: and the global economy. President Emmanuel Macron's surprise decision to
Speaker 2: call a snap election didn't result in as dire a
Speaker 2: situation as had been predicted, but it didn't result in
Speaker 2: a clear outcome either. According to Bloomberg opinion columnist Lionel Laurent.
Speaker 4: So, the final count is in first place, we have
Speaker 4: the left wing Popular Front block. They got a one
Speaker 4: hundred and eighty two seats. Bear in mind the golden
Speaker 4: magic number is two to eight nine for an absolute
Speaker 4: majority in the French Parliament. And Lepenn's far right group,
Speaker 4: which was tipped to really come in top, will become
Speaker 4: the biggest group, is in third place with only one
Speaker 4: four three seats. That was the big shock. And then
Speaker 4: in the middle second place, Emmanuel McCall's centrist block has
Speaker 4: done better than expected. So the messages nobody has an
Speaker 4: absolute majority, Leonel.
Speaker 2: President Macron's decision to call for a snap election was
Speaker 2: characterized as a gamble. Did that game pay off.
Speaker 4: So it did and it didn't. Basically, what has paid
Speaker 4: off is that clearly the Republican Front, this willingness to
Speaker 4: choose the voters, to choose the lesser of two evils
Speaker 4: when it comes to keeping Marine le Penn out of
Speaker 4: power has worked. Matcorn has, let's say, saved his centrist movement.
Speaker 4: That said, though it was clearly driven by tactical voting,
Speaker 4: there was a lot of dependency on the left to
Speaker 4: help save Macau's movement, and he as a character, as
Speaker 4: a leader is clearly weakened. I mean, his Centrist block
Speaker 4: initially had an absolute majority, but that's been withering over
Speaker 4: the years and it's lost loads of seats. So clearly,
Speaker 4: whoever leads the Centrist block in the future, it's not
Speaker 4: going to be Macon and they've i think won some
Speaker 4: time to choose a new leader and to bounce back
Speaker 4: from this. So I would say it's half paid off.
Speaker 2: What change between the first round of voting and the second.
Speaker 2: It came out of the first round of the far right
Speaker 2: had this very sizable, solid lead. What happened between then
Speaker 2: and the second vote.
Speaker 4: So just to get through the tactical part, So essentially
Speaker 4: in several hundred districts. The left wing block and Mackhorn's
Speaker 4: block essentially agreed to respectively pull out their own candidate
Speaker 4: to not split the vote. It's not a rare thing
Speaker 4: in France. It's not a rare thing in many countries
Speaker 4: to have people simply pull out of a race. But
Speaker 4: the amount of districts where that took place, well over
Speaker 4: two hundred, did, I think create a situation where we're
Speaker 4: wondering will voters actually turn out to vote because these
Speaker 4: parties are so different. You'll really be holding your nose
Speaker 4: to a great degree, so will people get up off
Speaker 4: the couch. The other thing is that the French, this
Speaker 4: two round system really shows its worth in situations like this.
Speaker 4: The first round vote, you vote with your heart, you
Speaker 4: express anger, the message is sent. But the French basically
Speaker 4: opened the door and peered into whatever you want to
Speaker 4: call it, the abyss, the pit of the sarlac. They
Speaker 4: took a look at what the reality of a La
Speaker 4: penn Win would be and they said no.
Speaker 2: Last time you and I spoke a few weeks back,
Speaker 2: you told me that this decision to call a snap
Speaker 2: election was one that was born out of frustration with
Speaker 2: government dysfunction. It strikes me when you look at the
Speaker 2: political landscape now in France that dysfunction really hasn't gone away.
Speaker 4: Yes, I think we just have to accept that a
Speaker 4: new chapter is opening and it is not a peaceful
Speaker 4: one where we've closed the door on La Pen and
Speaker 4: opened the door on some concord at that's stable and
Speaker 4: long lasting. The first task is to actually build the coalition.
Speaker 4: There is some hard work. It'll take time to build
Speaker 4: that government. And then a few months down the line,
Speaker 4: having tried to find some kind of common policies that
Speaker 4: people can agree on, which will frankly be very modest,
Speaker 4: maybe some tax increases, maybe some kind of watering down
Speaker 4: in Micael's reforms, it'll come time to do a budget
Speaker 4: and that is going to be tough. That's going to
Speaker 4: be where the cookie crumbles. So we are entering a
Speaker 4: very volatile and fractious period to French politics. And don't
Speaker 4: forget that the pen has not gone away. She will
Speaker 4: have time now to become more competent and get ready
Speaker 4: to govern and crucially constantly attack from the opposition benches
Speaker 4: mac Horn and the parties that I'm sure she will
Speaker 4: castigate as the elite who are stealing the votes of
Speaker 4: the true French. So it's going to get ugly. But
Speaker 4: I do think there is some value in having delayed
Speaker 4: or deferred whatever La penn has in store for the French.
Speaker 2: As we look ahead to the coming weeks, the coming months,
Speaker 2: if we get the kind of paralysis and dysfunction that
Speaker 2: you and I have been talking about, what are the
Speaker 2: consequences going to be for the country.
Speaker 4: Look, no one's expecting fireworks. France has deep seated issues.
Speaker 4: It has a very high debt load, it has an
Speaker 4: economy that's growing below the euro Area average, it's in
Speaker 4: demographic decline, it has a productivity lag and innovation lag
Speaker 4: with the US, and it clearly has a European leadership
Speaker 4: role that is at risk. So all of these issues
Speaker 4: are not going to be solved by a kind of
Speaker 4: coalition government that's cobbled together from one day to the next.
Speaker 4: That's not going to happen. But in terms of the
Speaker 4: kind of management of the day to day, what can
Speaker 4: we imagine there are going to be some pretty tough
Speaker 4: discussions with Europe because that is the constraint. Financial markets
Speaker 4: are not going to give France much room for maneuver
Speaker 4: there will be a constant testing with European partners and
Speaker 4: with markets as to what this government can do. So frankly,
Speaker 4: I'm not expecting huge, ambitious policies and it may simply
Speaker 4: be a question of how much extra can the government
Speaker 4: spend to deliver some of the purchasing power gains that
Speaker 4: voters want without causing a financial crisis.
Speaker 2: After the break, we head across the Channel to unpack
Speaker 2: election results in the United Kingdom and we look at
Speaker 2: what France's gridlock and Britain shift left mean for Europe
Speaker 2: and for the rest of the world. While the left's
Speaker 2: victory in France came as a shock, in the UK,
Speaker 2: the left leaning Labor Party was projected to prevail in
Speaker 2: the most recent elections, and that's exactly what happened. It
Speaker 2: was a big win for a party that suffered a
Speaker 2: devastating defeat by the Conservatives under Boris Johnson just five
Speaker 2: years ago. The UK Parliament is sitting Tuesday and the
Speaker 2: new Labor leader, kir Starmer has already started outlining his
Speaker 2: party's plans.
Speaker 3: Today we start the next chapter, begin the work of change,
Speaker 3: submission of national renewal and start to rebuild our country.
Speaker 2: To dig into the results and what they mean for
Speaker 2: the UK. I sat down with Stephanie Flanders, who runs
Speaker 2: economics and government coverage at Bloomberg. She's also a co
Speaker 2: host of the Bloomberg podcast Voter Noamics. I began by
Speaker 2: asking her to break down the results of the vote
Speaker 2: on July fourth.
Speaker 1: First and foremost, it was just a massive kicking for
Speaker 1: the Conservative Party, the biggest loss of seats of any
Speaker 1: prime minister, in fact, of any party in history in
Speaker 1: a UK election. Two hundred and fifty members of Parliament
Speaker 1: lost their jobs, often in seats where they thought they
Speaker 1: probably would have thought they'd be in there for life.
Speaker 1: And I think, just to sort of crystallize it, fourteen
Speaker 1: million people voted for Boris Johnson's Conservative Party. Barely five
Speaker 1: years ago this election, that number was just seven million. Now,
Speaker 1: Labour did very well out of that. It actually got
Speaker 1: more than four hundred seats, nearly two thirds of the seats.
Speaker 1: But it's interesting to note that it really only got
Speaker 1: a third of the vote's cast and actually got not
Speaker 1: that many more votes than in the last election. You
Speaker 1: have a system with two main parties that have national coverage.
Speaker 1: If one loses big the other wins big, even if
Speaker 1: it's with a relatively small proportion of votes. And in
Speaker 1: the end, what matters to us to the world is
Speaker 1: that Keirs Stalmer's Prime Minister with an impregnable majority and
Speaker 1: we shouldn't expect that to change for five years.
Speaker 2: Should we insure with this as a leftward shift or
Speaker 2: is this more just a rebuke of Boris Johnson? Is
Speaker 2: it a swing left as you see.
Speaker 1: In You know, I think the exceptional thing about the
Speaker 1: last fourteen years of Conservative government is that they have
Speaker 1: all felt like very different governments. You know, we had
Speaker 1: five prime ministers, almost as many economic policies, business taxes
Speaker 1: went down and then up, then down, then up. We
Speaker 1: were in the European Union at the start of that period,
Speaker 1: and then out. So I would say it's a move
Speaker 1: to the left, very sort of slight moved to the
Speaker 1: left at a time when many other countries in Europe
Speaker 1: and potentially the US as well, have often been turning right.
Speaker 1: This government's going to be a bit more oriented towards
Speaker 1: investing in public services and a bit more tolerant of
Speaker 1: increasing taxes at the margin. But the woman we have
Speaker 1: coming in to be the first female Chancellor of the
Speaker 1: Exchequer Treasury Secretary, used to work at the Bank of England.
Speaker 1: She's pretty orthodox in her approach. Rachel Reeves, I think
Speaker 1: the big change, more than anything else, will be not
Speaker 1: the lurch to the left, but stability. You know, a
Speaker 1: vote for a new party was in this case a
Speaker 1: vote for stability after quite a lot of psychodrama and upheaval.
Speaker 2: As we move from conservative leadership to labor leadership, what
Speaker 2: does that mean for the country as a whole.
Speaker 1: You're moving to a sort of traditional kind of labor leader.
Speaker 1: Keir Starmer's sort of straight talking lawyer is not spend
Speaker 1: a lifetime in politics. In fact, he only came into
Speaker 1: Parliament about ten years ago. Less than that, in his
Speaker 1: early fifties he was a lawyer. He'd run the Crown
Speaker 1: Prosecution Service. So that's a bit like being the kind
Speaker 1: of chief US Attorney. And there is no such thing
Speaker 1: as Starmerism. It's not like his predecessor Jeremy Corbyn, whom
Speaker 1: many people will remember. He wants to just get stuff done,
Speaker 1: or at least that's what he's put across to people.
Speaker 2: Stephanie, could you give us the lay of the land
Speaker 2: and describe the many challenges this new labor government inherits.
Speaker 2: What's the party's focus going to be on day one?
Speaker 1: The focus has been throughout their campaign, and I think
Speaker 1: most economists would say it's been in the right place.
Speaker 1: Has been on growth, on the need to get Britain's
Speaker 1: growth rate back up. If we had grown our same
Speaker 1: at the long term average rate since two thousand and eight,
Speaker 1: our economy would be forty percent bigger. That's how much
Speaker 1: we fall and short. And it's true that lots of
Speaker 1: countries have struggled after the global financial crisis, but by
Speaker 1: and large we have done worse than many, and particularly
Speaker 1: on a kind of per head basis in terms of
Speaker 1: living standards. Our investment is among the lowest in the
Speaker 1: G seven consistently, and yet partly as a result of
Speaker 1: the lower growth and the pressures on population and on
Speaker 1: the aging society. Taxes are actually the highest they've been
Speaker 1: in seventy years, and you know, money's extremely tight, so
Speaker 1: he's going to have to try and square that circle
Speaker 1: whilst avoiding a big squeeze on public service spending, which
Speaker 1: is otherwise coming down the track. And again that all
Speaker 1: comes down to getting faster growth and higher investment crucially.
Speaker 2: So we're focused on these two major parties. But we
Speaker 2: did say one surprising result, the far right Reform Party
Speaker 2: got fourteen percent of the vote. The party's leader, Nigel Faraj,
Speaker 2: pretty divisive figure in British politics. What should we take
Speaker 2: away from that.
Speaker 1: Well, it's certainly true that Nigel Ferrage, this very controversial figure,
Speaker 1: gets on quite well with Donald Trump, who'd originally said
Speaker 1: he was going to not be a big part of
Speaker 1: this election because he was more focused on the US.
Speaker 1: He wanted to go and hang out in Mara Lago.
Speaker 1: He decided once the election was called to take over
Speaker 1: the party that he has helped to create, Reform UK
Speaker 1: and has attracted an enormous amount of support explicitly from
Speaker 1: disgruntled Conservative particularly the sort of anti immigrant side, anti
Speaker 1: European side of the Conservative Party. So how the rump
Speaker 1: Conservative Party decides to deal with him, deal with that party,
Speaker 1: what lessons they draw ideologically from this is going to
Speaker 1: be a big challenge for the Conservatives, although I should say,
Speaker 1: you know, the interesting thing is we don't have to
Speaker 1: care about the Conservatives for quite a long time and
Speaker 1: their internal struggles, but it will certainly be interesting to
Speaker 1: watch what happens to the right of the UK, who
Speaker 1: are now out of power. Given this rise of nigerl Ferrage.
Speaker 2: It's tempting to see the outcome of both the French
Speaker 2: and the British elections as a rejection of extremism. As
Speaker 2: President Joe Biden suggested in an interview with MSNBC on Monday,
Speaker 2: Pras rejected extremism.
Speaker 4: Democrats were rejected.
Speaker 2: Here as well, But that might not be the best takeaway.
Speaker 2: Nearly half of the world's population lives in countries holding
Speaker 2: elections this year, and Stephanie and Lionelle say that the
Speaker 2: results could serve as a wake up call of a
Speaker 2: different sort for politicians running for reelection.
Speaker 1: The overriding lesson that I see from looking at all
Speaker 1: of these elections through this year is an anti incumbency
Speaker 1: feeling in most places that are truly democratic. Obviously Russia
Speaker 1: we've had very strong result for President Putin, but where
Speaker 1: you have a vibrant and functioning democracy, voters have mostly
Speaker 1: punished incumbents. You know, even in India, where Prime Minister
Speaker 1: Modi was returned much less emphatically than expected. We saw
Speaker 1: that with Milay in Argentina. I think the other way
Speaker 1: in which we're definitely in line with others, is a
Speaker 1: vote against inflation.
Speaker 4: We have had an inflation shock in a lot of countries,
Speaker 4: and that can really blow up a leader's record, which
Speaker 4: seems otherwise great on paper when you look at the
Speaker 4: jobless rate, when you look at economic growth, but when
Speaker 4: people feel their real wages get squeezed, whether it's in
Speaker 4: the US, whether it's in France, whether it's in the UK,
Speaker 4: that really can change people's lives and it can change
Speaker 4: the way people vote. And so I think that even
Speaker 4: though we are exiting I guess the inflation shock, I
Speaker 4: do think that there is a question that everyone needs
Speaker 4: to ask, which is have we really learned the lessons
Speaker 4: from this inflation shock? We sure we understand it? And
Speaker 4: are we sure we know how to fight the next
Speaker 4: one when it comes along.
Speaker 1: Voters are looking at the cost of food, cost of energy,
Speaker 1: cost of rent, other basics. They don't like it, and
Speaker 1: they're punishing governments for it.
Speaker 2: This is the big take from Bloomberg News. I'm David Gura.
Speaker 2: Make sure to check out the latest voter Nomics podcast
Speaker 2: on the French election featuring Jean Claude Trichet, the former
Speaker 2: president of the European Central Bank. This episode was produced
Speaker 2: by Julia Press and Jessica Beck. It was edited by
Speaker 2: Aaron Edwards and Stacy Vanick Smith and fact check by
Speaker 2: Adriana Tapia, Rff, Jalasho Perry, and Thomas lou It was
Speaker 2: mixed by Robert Williams. Special thanks to Julia Manns and
Speaker 2: Keith Coe. Our senior producers are Kim Giittleson and Naomi Shaven,
Speaker 2: and our senior editor is Elizabeth Ponso. Nicole Beemster bor is.
Speaker 2: Our executive producer Sage Bauman is Bloomberg's head of podcasts.
Speaker 2: Thanks so much for listening. Please follow and review The
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