Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: Our former model is over. This is not the same world.
Speaker 2: We are over regulating an underinvesting. If we follow our
Speaker 2: classical agenda, we will be out of the market.
Speaker 3: I have no doubt.
Speaker 1: Welcome back to voter Nomics, where politics and markets collide.
Speaker 1: This year, voters around the world have the ability to
Speaker 1: move markets, countries and economies like never before, so we
Speaker 1: created this series to help you make sense of it all.
Speaker 1: I'm Stephanie Flanders.
Speaker 4: I'm Adrian Wooldridge, and I'm Alegri Stratton. Steph's good to
Speaker 4: have you back from Berlin.
Speaker 1: Yes, so I was there to host a panel. You
Speaker 1: just heard a bit of it. Conversation on stage with
Speaker 1: the French President, Emmanuel Macron doesn't happen every day, and
Speaker 1: you just heard from him at the top of the show.
Speaker 1: And it was a slightly strange setup in this that
Speaker 1: I was on stage mainly talking to Macron, but the
Speaker 1: chairman of the big event that was being held, the
Speaker 1: Berlin Global Dialogue, Lars Hendrik Roller, was also up on
Speaker 1: stage and we were supposed to be focusing on Europe's
Speaker 1: role in a multipolar future. But I obviously wanted to
Speaker 1: also get him some questions about the state of things
Speaker 1: in France. We've obviously had several months where there was
Speaker 1: a lot of uncertainty about what the government was going
Speaker 1: to be.
Speaker 4: So how did you find him? Was he sort of
Speaker 4: sort of normal, feistyself.
Speaker 1: For he did do about sort of ten or fifteen
Speaker 1: minutes of remarks, and you were mainly reminded and what
Speaker 1: a great speaker he is, but who also does a
Speaker 1: very good job of just sounding like he really cares.
Speaker 1: And this is his sort of cri de cour that
Speaker 1: he wants to save Europe, and he's still trying to
Speaker 1: save Europe, even though he's really probably further away from
Speaker 1: it than he was when he came into office in
Speaker 1: twenty seventy.
Speaker 5: Did you think he was a operation in the sense
Speaker 5: that he prepared very carefully for encountering you or.
Speaker 1: Is this just himlater on? He did seem to be
Speaker 1: like many people on the street in Germany who asked
Speaker 1: me directions, they I, somehow do look German and so,
Speaker 1: and he seemed to think I was German, which was fine,
Speaker 1: except for I was kind of surprised that he was
Speaker 1: going to be on stage, would be for an hour,
Speaker 1: and none of his staff had bothered to say, by
Speaker 1: the way, this woman's actually British and she's an economist
Speaker 1: or whatever. So that was quite a sort of entertaining aspect.
Speaker 1: He kept on like saying, well, you care very much
Speaker 1: in this country about cars, and I was like, you know,
Speaker 1: don't look at em.
Speaker 5: But he seemed extraordinarily jaunty given the circumstances in France.
Speaker 1: I mean, I did think that, and obviously afterwards one's
Speaker 1: always thinking, oh, you know, it should have been been tougher.
Speaker 1: I mean, if there is a sort of a tragic
Speaker 1: arc to his time in office, if you remember when
Speaker 1: he came in, he'd obviously had that extraordinary, very rapid
Speaker 1: assent to the presidency, having been really more of an
Speaker 1: advisor figure only a year earlier or junior minister, and
Speaker 1: he said he remember he went to the World Economic
Speaker 1: Forum and devils, he said, France is back. He had
Speaker 1: lots of kind of reaching out to business, some of
Speaker 1: which was very successful. If you think post Brexit the
Speaker 1: number of banks and others that have been attracted to Paris.
Speaker 1: He really did quite a lot in the labor market
Speaker 1: to get people back to work. Unemployment have been stuck
Speaker 1: over ten percent for years in France, down to seven,
Speaker 1: stuck at seven now. But he's done quite a lot.
Speaker 1: He did the pension reform with those enormous demonstrations, massive
Speaker 1: political cost, and you step back and you think, what
Speaker 1: has all that achieved. Public spending is still among the
Speaker 1: highest in Europe, very fractionally lower than it was when
Speaker 1: he came in office, budget deficits actually much worse than
Speaker 1: it was, and he's got a government now that he
Speaker 1: can't control, that is actually is hemmed in by the
Speaker 1: far right and the far lane.
Speaker 5: It also struck me that, you know, he conducted this
Speaker 5: extraordinary experiment in sort of creating a populism of the
Speaker 5: center of sort of trying to marry populism with technocratic
Speaker 5: politics in order to draw the poison out of populism,
Speaker 5: and it hasn't done that. It's actually further polarized and
Speaker 5: already polarized system.
Speaker 1: That is the extraordinary thing. It did seem like a
Speaker 1: mistake to have called that snap election after the European
Speaker 1: election results. You're here. He defends that absolutely and says, actually,
Speaker 1: if he hadn't done that, he would be in no
Speaker 1: better situation now because the same question marks would be
Speaker 1: hanging over his agenda. But the truth is, you know,
Speaker 1: whether that's right or wrong, he is for the rest
Speaker 1: of his term probably going to have to sort of
Speaker 1: stand by. And the best hope is that what he's
Speaker 1: done so far doesn't get reversed because any effort to
Speaker 1: push forward with any of these big reforms. You know,
Speaker 1: but Marie La Penn can bring down this government just
Speaker 1: by calling a confidence vote tomorrow.
Speaker 4: But to me, there's such schizophrenia at the top of
Speaker 4: Europe now where you've got and I wonder how much
Speaker 4: you know you've sort of observed this talking to him,
Speaker 4: because you're talking to him in Germany where right now
Speaker 4: this week we've got on the one and Germany and
Speaker 4: the EUEU tariffs on Chinese evs they don't want them
Speaker 4: and France does want them. And then on the other hand,
Speaker 4: as you also talked to him about later, there's this
Speaker 4: division between himself and Schultz over what they should do
Speaker 4: with the free trade deal with the South Americans. So
Speaker 4: outside looking across to them, they look to have such
Speaker 4: a schizophrenia right at the top.
Speaker 1: Yeah, and I think that's even evident in his own
Speaker 1: policy towards China right, because you know, he's at one
Speaker 1: hand saying absolutely, we have to have a level playing field.
Speaker 1: I'm going to be tough, and he's pushing these tariffs
Speaker 1: on Chinese electric vehicles, which you know, we were sitting
Speaker 1: in Berlin. The previous panel had involved someone from Mercedes
Speaker 1: Benz and indeed one of the German ministers both saying
Speaker 1: we can't do it. And it's this situation which speaks
Speaker 1: to our mutual depend you know, the dependence of the
Speaker 1: German model on China. The German car industry does not
Speaker 1: want tariffs on the Chinese imported electric vehicles because they
Speaker 1: export so much to China and they don't want the retaliation.
Speaker 1: In Germany in particular, there's that schizophrenia. But even France,
Speaker 1: on the one hand, is talking about taris, on the
Speaker 1: other hand, is desperately trying to get investment from China
Speaker 1: to France. Come to France, don't come to Germany. You know,
Speaker 1: they're playing off each other even as they speak, say
Speaker 1: they want to speak in one voice.
Speaker 5: It struck me also that there was an extraordy schizophrenia
Speaker 5: in what he was saying. On the one hand, he
Speaker 5: sounds georgy, He sounds self confident, but underneath it all
Speaker 5: there's a deep worry, I mean a really deep worry
Speaker 5: about the state of Europe and its capacity to address
Speaker 5: its problems. And it struck me. I wonder if there
Speaker 5: was a that there was a presumption in the title
Speaker 5: of your piece of your interview about Europe in a
Speaker 5: multipolar world, which is just wrong. It's not a multipolar
Speaker 5: world any more. It's US versus China, and it's US
Speaker 5: versus China that's determining you know, electric vehicles and that
Speaker 5: sort of playing field. But also if you look at
Speaker 5: what's happening in the Middle East, Europe isn't playing a part.
Speaker 5: It's all us.
Speaker 1: You're quite right, you know, we have our own economists
Speaker 1: have our economists have done analysis that shows how far
Speaker 1: Europe's fall behind in terms of its potential growth. I
Speaker 1: think it's about a gap of about twenty percent of
Speaker 1: GDPs opened up in the last few years and that
Speaker 1: we think would grow to forty percent. You know, European
Speaker 1: Union being forty percent smaller in terms of its potential
Speaker 1: output than the US. That's in a generation of a
Speaker 1: massive shift in the relative standings. I would say, I
Speaker 1: guess my passing thought on this is that we will
Speaker 1: miss him because there are many European leaders. In fact,
Speaker 1: he may be the only one. I felt as we
Speaker 1: were leaving that could that could go on one of
Speaker 1: those US Party convention stages and deliver a knockout.
Speaker 5: Speech anyone after blur no blurse, Yes, but I.
Speaker 1: Mean Blair not being a European leader any ayre you
Speaker 1: might want to be. I think, you know, and despite
Speaker 1: the fact that he is in fact French, I think
Speaker 1: he's the only one who could represent Europe on that
Speaker 1: kind of stage, and he does have a pretty sharp
Speaker 1: idea of what is at stake in Europe. Continuing to
Speaker 1: slip behind well after all that, we should hear that
Speaker 1: interview with the French President Emmanuel Macron. You will also
Speaker 1: hear I asked a few questions to Lars Henry Kbrawler.
Speaker 1: He was Chancellor Merkle's chief advisor for a long time.
Speaker 1: He's been around the block. You will hear. He wasn't
Speaker 1: keen to be critical of his own government, but he
Speaker 1: did speak to some of the questions that we talked about.
Speaker 1: Thank you very much, Monsieur and Las Henri. Thank you
Speaker 1: for joining us again. You mentioned a few times Mario
Speaker 1: Dragui's report, I think he'd read your so on speech
Speaker 1: from April. Some of it read sounded like you, and
Speaker 1: he certainly he framed the debate about European compectiveness in
Speaker 1: a similarly stark way as an existential challenge facing the
Speaker 1: European model. And as you mentioned, he proposed some very
Speaker 1: concrete steps, some of them quite difficult, some of them expensive,
Speaker 1: for moving Europe away from this path of decline. How
Speaker 1: many of those do you think will be implemented while
Speaker 1: you are French president.
Speaker 2: Look, thank you very much and I'm happy to be
Speaker 2: here with a roller, and thank you for organizing the
Speaker 2: seventh Look, I hope the maximum number of items, because
Speaker 2: I already believe that we are at risk. To be honest,
Speaker 2: and it's just a word. I think our own model
Speaker 2: was completely changed and has to be research. And when
Speaker 2: you look at the European model, largely based by the
Speaker 2: way on the strength of German during Germany during the
Speaker 2: past decade, we were based on exports and a big
Speaker 2: part of the key industry are making industry to China.
Speaker 2: We were based on lo cost energy, Russian gas. We
Speaker 2: were based on different sombrella from the US without any question,
Speaker 2: and everything now is shaken. China has over capacities and
Speaker 2: is clearly a competitive place, so it's no more secured
Speaker 2: place for our exports. Russian war killed lo cost energy
Speaker 2: and the killer of our competitiveness today is a big
Speaker 2: gap in terms of energy prices everywhere. This is why
Speaker 2: we have to completely change our business and have an
Speaker 2: integrated energy model, because we can deliver with nuclear and renewables,
Speaker 2: but not without being integrated. And very clearly post Afghanistan,
Speaker 2: some people can have doubts and the potential change in
Speaker 2: leadership in the US means that this is not a
Speaker 2: guarantee total total. So this is I want to insist
Speaker 2: on that because it's super important to assess fairly the
Speaker 2: fact that our former model is and this is not
Speaker 2: a question of adjustment. This is not the same world
Speaker 2: twenty twenty four, twenty twenty five. And on top of that,
Speaker 2: we are making the same mistakes. On top of the
Speaker 2: key elements I mentioned, we are overregulating and underinvesting. So
Speaker 2: just if in the two to three years to come,
Speaker 2: if we follow our classical agenda, we will be out
Speaker 2: of the market, I have no doubt. So I think
Speaker 2: what we have to deliver in the two three years
Speaker 2: to come is capital market union. My view is that
Speaker 2: we have to rush on energy beyond what we already decided,
Speaker 2: which will be implemented for twenty twenty six, which will
Speaker 2: avoids the big pick and the unstability of the energy
Speaker 2: market we had during the past few years. We corrected that,
Speaker 2: but we have to go much faster and further, and
Speaker 2: we need this investment shock I mentioned, and I think
Speaker 2: the simplification agenda and let's say pose in terms of regulation,
Speaker 2: but even the regulation in some issues it's absolutely critical.
Speaker 1: Can you have that investment shop without issuance of joint debt?
Speaker 2: I think you know, the best way to deliver is
Speaker 2: not to to create big trauma at the beginning by experience.
Speaker 1: But you persuade. You persuaded the Germans before. Can't you
Speaker 1: do it again?
Speaker 3: This is true?
Speaker 2: But I was, if I want to be fair, I
Speaker 2: was a little bit helped by a colleague called COVID
Speaker 2: nineteen and it changed the reality. But what I think
Speaker 2: we have an external systemic shock. I think we have
Speaker 2: to assays that during the pandemic, we all experienced a
Speaker 2: symmetric shock for all our economies and this is why
Speaker 2: we have We made this move move with Chancellor Merkle,
Speaker 2: and I think it was a unique movement. This is
Speaker 2: really for me a fundamental change of our EU. Now.
Speaker 2: I want to be totally aware of the fact that
Speaker 2: we are leaving a symmetric shock on our economies whose
Speaker 2: scale and magnitude is underestimated because the real location factor
Speaker 2: is huge. Look at the chemical industry in Europe completely
Speaker 2: being relocated because of area I mentioned. If you don't
Speaker 2: deliver the level playing filled a gender, we will be
Speaker 2: super happy with rich as a good regulation for European consumer,
Speaker 2: but no more existing chemical industry and it will be
Speaker 2: the same for still it will be the same for
Speaker 2: I mean the existing business we have because of energy
Speaker 2: costs and overregulation. So we have to fix energy issue
Speaker 2: and overregulation and for me the single market on energy
Speaker 2: and on top of that diversification of our phonitions to
Speaker 2: reduce this discrepancy and acceleration of playing field agenda under
Speaker 2: and pose in terms of regulation. It's critical and if
Speaker 2: we don't have the level playing fielder agenda, we will
Speaker 2: be killed in this market. And in parallel, for clean
Speaker 2: energy and artificial intelligence, we have to invest much more
Speaker 2: rapidly and protect as well or key players, otherwise they
Speaker 2: will be relocated in the US.
Speaker 1: Wears Henrik. I mentioned the joint debt question, but actually
Speaker 1: there's a broader issue here that you listen to President Macron,
Speaker 1: you read the drug E report, you read many speeches
Speaker 1: frankly from European leaders, but not from the German Chancellor,
Speaker 1: not from German leaders assessing the threat to the growth
Speaker 1: model in as fundamentally as this the stark language that
Speaker 1: President Macron has used, how does Europe move forward, rush
Speaker 1: forward on this agenda if there isn't that understanding, that
Speaker 1: same analysis at the top in Germany.
Speaker 6: I'm not sure that you don't share the analysis with
Speaker 6: with mister with the Chancellor Shultz. Obviously he's a different person.
Speaker 6: But I think the analysis that we need simplification what
Speaker 6: you were just saying, we need more investment, we have
Speaker 6: less regulation. I think that is something which you know
Speaker 6: the chancell he also says, I think that's a fundamental issue.
Speaker 6: I think capital market union, as I said, is an
Speaker 6: important step. But in the end, and you know, he
Speaker 6: has been remarkable European. I remember when you first came.
Speaker 6: You're actually a chapper for a while. If I may
Speaker 6: say that, yeah, is together, right, but he has moved
Speaker 6: on a lot.
Speaker 1: I don't think you should feel bad. I think it's okay.
Speaker 6: And of course you know he's there's a reason why
Speaker 6: he's moved on and and and so he you know,
Speaker 6: he came on stage and he said, we want Europe,
Speaker 6: and you give your speech, and there was a bait
Speaker 6: whether Germany was responding appropriate to the young French president
Speaker 6: who was doing that. But I think he was always
Speaker 6: this good European and I think we're very lucky to
Speaker 6: have him actually as a European. Also if you think
Speaker 6: about the latest developments in your country, if I may
Speaker 6: say so, mister president, and also in our country. And
Speaker 6: I think the ultimate problem always in the end, and
Speaker 6: you alluded to, is that there's still no European answer
Speaker 6: to many of these things. But it's not easy in Europe,
Speaker 6: you know, with and even if I may say so,
Speaker 6: if Germany and France you said on Capitol market Union
Speaker 6: in Meserbach, you have a paper which took us I
Speaker 6: think ten years or something to get a French and
Speaker 6: a German position on that. So the leadership of Germany
Speaker 6: and France is very very important. I think the only
Speaker 6: way actually to move Europe forward. I think that's also
Speaker 6: your view. But are the others then also in the
Speaker 6: future more likely to fall in line in terms of
Speaker 6: moving Europe forward.
Speaker 1: Maybe it took ten years to have Franco German agreement
Speaker 1: on that, but we've only got a few days to
Speaker 1: have Franco German agreement on the tariffs on Chinese electrical vehicles,
Speaker 1: and you mentioned it in your speech on this stage.
Speaker 1: A year ago. Actually, I spoke to Chancellor Schultz who
Speaker 1: said he didn't want to see a trade war with China.
Speaker 1: He didn't like tariffs. His minister earlier said something quite similar.
Speaker 1: But there is a vote on whether those tariffs go
Speaker 1: through on Friday, So can I just ask do you
Speaker 1: think that will pass, that the EU governments will confirm
Speaker 1: those tariffs.
Speaker 2: I don't know before the vote. I can tell you
Speaker 2: that I do support the European Commission on that because
Speaker 2: what I was speaking about electrical vehicles on the European market,
Speaker 2: and what is the reality you have the European car makers.
Speaker 2: They go to the market and by the way, we
Speaker 2: use our taxpayers money to subsidize the consumer to buy
Speaker 2: this these cars and they have to compete with some
Speaker 2: car makers producing in China with an existing advantage. But
Speaker 2: it's part of the offshoring production because reproduce in much
Speaker 2: lower cost condition. But on top of that they benefit
Speaker 2: from subsidies from the Chinese government. This is a bias
Speaker 2: for your market. The question is which model do you choose?
Speaker 2: Do you want to be a consumer or a producer.
Speaker 2: And now this is the dilemma we have. Twenty years
Speaker 2: ago for solar panels, we decided to kill our markets
Speaker 2: and we exactly we had the same dilemma. We did choose.
Speaker 2: We killed our industry. We had an existing industry, we
Speaker 2: killed it and we deployed solar panels in a lot
Speaker 2: of places Chinese once. So we created a dependency which
Speaker 2: could create some problem.
Speaker 3: We experiment that in.
Speaker 2: COVID time and we killed the ability to produce on
Speaker 2: the European soil. It's not a good idea when you
Speaker 2: need growth and you have to finance such a social
Speaker 2: model as the one we have. Now, the question is
Speaker 2: do we want a fair competition or not. I do
Speaker 2: want fair competition. So the EU Commission launched precisely a
Speaker 2: series of studios exchange with all the car makers and
Speaker 2: just correct the level of discrepancies to establish the level
Speaker 2: playing field, so you have something from nine to ten
Speaker 2: for those who are less helped, and I think the
Speaker 2: range is between twenty one and thirty five person TIFs.
Speaker 3: This is a matter of credibility.
Speaker 2: For our market, and I insist on that if you
Speaker 2: don't preserve the level of playing field, just don't hope
Speaker 2: that you want to produce and preserve you're in the
Speaker 2: scale foot print in your hope.
Speaker 1: You speak the Chancellor shops earlier. I think it is
Speaker 1: a did you make progress? Unfortunately you didn't even have
Speaker 1: any advisers in the room and the reporters were unable.
Speaker 1: No chance of us finding out. So I ask.
Speaker 3: And I do respect.
Speaker 2: All the positions and the sensit of the market. I
Speaker 2: think the question is what will become the Chinese market
Speaker 2: for the for the car makers. My view is that
Speaker 2: it did change during the past few years and it
Speaker 2: should not be underestimated. The US just put a one
Speaker 2: hundred person tax one hundred person tax undifferentiated, so let's
Speaker 2: wake up. We live in the same world. You cannot
Speaker 2: have China over subsidizing a lot of countries, even India
Speaker 2: and others reacting to these subsidies, the US overreacting by
Speaker 2: one hundred person trife and the od thing. You're welcome
Speaker 2: and it doesn't fly. Otherwise we will be happy consumers
Speaker 2: of non European producers. I can tell you we will
Speaker 2: have an issue of growth in a few years time.
Speaker 1: You spoke about the importance of Europe speaking with one
Speaker 1: voice in order to get one voice on this, would
Speaker 1: you be would do you agree to a delay or
Speaker 1: some kind of compromise or you think.
Speaker 2: I want to be efficient and find compromise and respect
Speaker 2: all the positions. I think the I want to advocate
Speaker 2: the CEO Commission. They did a great job. It was
Speaker 2: bold to do so, honestly because they had a lot
Speaker 2: of pressure not to do it. And in the DNA
Speaker 2: of the Commission, you know that you work there, Larsendric
Speaker 2: during Earth it was not in the DNA of the
Speaker 2: European Commission to work on this type of issue.
Speaker 3: And I think it's for me.
Speaker 2: This is a signal that clearly we have a much
Speaker 2: more strategic and geo strategic commission as we wanted than before.
Speaker 3: But clearly I want to insist in that we are
Speaker 3: not just a market or consumers, and we were used
Speaker 3: just to behave following the nine and this is not
Speaker 3: a good idea.
Speaker 1: You talked about protectionism as an ugly word, and that
Speaker 1: it's about having a more realistic strategic vision, as the
Speaker 1: US does and certainly as China does. I wonder if,
Speaker 1: at the same time as having these tariffs for a
Speaker 1: level playing field, if you were to support, for example,
Speaker 1: finally moving ahead with Mercasoor, would that send a message
Speaker 1: to other parts of the world that Europe is still
Speaker 1: open for business, that this is a specific thing with China,
Speaker 1: but actually Europe is still very much open to trade deals.
Speaker 2: I'm in favor of any deal which will be fair.
Speaker 1: Does it look fair right now?
Speaker 3: Why?
Speaker 2: Because exactly the same reason level playing field. You cannot
Speaker 2: impose a bunch of regulation to your industries and your
Speaker 2: farmers that they are digesting by the way, because it's
Speaker 2: not yet completed, and at the same time open to
Speaker 2: economies totally designed with this regulation. How do you want
Speaker 2: to explain to a farmer that you will be it
Speaker 2: will not be allowed to use this pesticide, this chemical
Speaker 2: ingredient and so on. And at the same time on
Speaker 2: ease sector you say you are more than Maltam. You
Speaker 2: can come with your food without respecting the same all. Honestly,
Speaker 2: I I never advocate regulation that I don't understand myself,
Speaker 2: and I think this is a good rule and and
Speaker 2: don't be naive.
Speaker 3: We speak about Marco Shore. Brazil just imposed tariff.
Speaker 2: For if It as well, and in the can system
Speaker 2: they want to exclude public procurement for the deal from
Speaker 2: the deal. They protect themselves, the protect the economies. And
Speaker 2: my point is just we I think a lot of
Speaker 2: people in Europe underestimated what happened during the past two
Speaker 2: to three years. But we had two huge shocks which
Speaker 2: could completely change our approach. And why in Ukraine the
Speaker 2: end of our energtical model and the end of the
Speaker 2: WT or order. I love and Gozi, I'm a strong
Speaker 2: advocate of the W two. Understand me. But just for
Speaker 2: the first time in our recent histories, the US decided
Speaker 2: not to be compliant with the wtwo for clintech. But
Speaker 2: this is too you change. If we stay and stick
Speaker 2: to the same policy we are, we have no chance.
Speaker 1: One of the big features of your presidency in the
Speaker 1: first few years, President Macron was that strength at home
Speaker 1: gave you strength in Europe. You made decisive reforms the
Speaker 1: employment many other things. You've got the fiscal house in order,
Speaker 1: and that gave you the power to push things through.
Speaker 1: I think many people here will be looking at the
Speaker 1: time what has happened in the last few months in France,
Speaker 1: the fragility of the new government under Messi Baltney, and
Speaker 1: wondering whether you still have that capacity to push through change.
Speaker 1: Do you worry that it was a mistake to call
Speaker 1: that election.
Speaker 2: No, I don't think so. Why because it never happened
Speaker 2: without a coavitation in France to be re elected. So
Speaker 2: I'm very lucid about my situation and we had a
Speaker 2: relative majority without any partners, so I called for snap
Speaker 2: elections for this reason. After two little bit more than
Speaker 2: two years, well we delivered. I mean, during the past
Speaker 2: two years we delivered the reform of indemnification of unemployed people,
Speaker 2: a pension scheme reform, an immigration reform. I mean, when
Speaker 2: I look around in Europe, I don't see a lot
Speaker 2: of countries deploying such a reform agenda. So we were
Speaker 2: under pressure, and I was very clear on the fact
Speaker 2: that when you have the far right more than thirty
Speaker 2: five persons, you cannot follow up during three years to come,
Speaker 2: because I had three years to without making a move.
Speaker 2: But I think you should not see that as a
Speaker 2: source of instability. The reaction of the French people was
Speaker 2: the opposite, because if they had confirmed the thirty five
Speaker 2: person for the far right and what a lot of
Speaker 2: people thought, I would have a far rightist prime minister.
Speaker 3: Today it's not a case.
Speaker 2: So what we had for the first time in our history,
Speaker 2: which is much more the custom in your country and
Speaker 2: a lot of European country, is a fragmented parliament. Fine,
Speaker 2: this is less our culture to have cooperation between the parties.
Speaker 2: This is my problem. So I'm trying to create this
Speaker 2: dialectic work between the parties to work together. It's not
Speaker 2: a natural move, but I'm reasonably optimistic about the fact
Speaker 2: that reasonable social Democrats, Centrists and reasonable rightists can work
Speaker 2: together for the years to come to deliver strong agenda.
Speaker 2: And what we have to do is first to preserve
Speaker 2: and die just all the reforms we delivered dur in
Speaker 2: the past seven years, and we have to deliver more
Speaker 2: for our young people. We have to complete what we
Speaker 2: did an apprenticeship to have better and faster access to
Speaker 2: the market is one of the key points for the
Speaker 2: French system to have more growth. We have to follow
Speaker 2: up what we did on the unemployment system. We have
Speaker 2: to work on the access to our labor market for
Speaker 2: senior workers, and we have a lot of sectorial reform
Speaker 2: to be launched. We have in France. This is our chance,
Speaker 2: the ability, even with a relative majority, to deliver these
Speaker 2: reforms at the parliament. But I think we can create
Speaker 2: dynamic and I do trust mister Baneer's government to be
Speaker 2: in this situation to deliver useful reform for the countries.
Speaker 2: Because the agenda is quite clear. We have to modernize
Speaker 2: the country to be part of this agenda. We have
Speaker 2: to deliver at the European scale, and at the same
Speaker 2: time we have to make more effort on social coasion
Speaker 2: and stability of the country. This is normal in the
Speaker 2: lifetime of the country after seven years. So I'm totally
Speaker 2: lucid about that and optimistic. But I want to focus
Speaker 2: on the fact that today the key points of the
Speaker 2: reform agenda for me is at the European scale. I
Speaker 2: think we put in place a lot of reforms that
Speaker 2: now we have to deliver, and we have to deliver
Speaker 2: in concrete terms, we have less laws to be passed
Speaker 2: and what points on the pension scheme is for the
Speaker 2: years to come, and it's already voted, but the key
Speaker 2: elements are to be decided at the European scale, and
Speaker 2: I think if we want to improve our growth, both
Speaker 2: in Germany and France, for me, the top of my
Speaker 2: priority are at the European scale, because this is where
Speaker 2: we can unlock a lot of growth and potentials.
Speaker 1: But Las Henric, when you have a country coming to
Speaker 1: these discussions that has a six percent of GDP budget
Speaker 1: deficit as France now has one hundred and ten percent debt,
Speaker 1: is having to have an extended period to get back
Speaker 1: within the convergence criteria. That is not a strong negotiating position.
Speaker 1: You mean that country has, that country being France.
Speaker 6: I don't think that negotiation position of France depends on
Speaker 6: the the budget deficit. I think there's more to that
Speaker 6: than just that one. So I think the problem of
Speaker 6: debt in the world, I think is an issue, and
Speaker 6: I think Europe needs to be careful of having prudent
Speaker 6: fiscal rules and stimulus and I think that's important. But
Speaker 6: I think I agree with aman with President macrant that
Speaker 6: it is much more of a European issue, I think
Speaker 6: the future of Europe than it is a domestic French one,
Speaker 6: as he has done a lot of the reforms when
Speaker 6: he became president.
Speaker 2: I mean to be just to highlight the point and
Speaker 2: make it clear why are we in the situation. We
Speaker 2: had an issue during the low growth this year, so
Speaker 2: we have less written on our budget in terms of taxes.
Speaker 2: This is why we have this discrepancy with the forecast.
Speaker 2: And we had a difference in terms of forecast with
Speaker 2: some public expenditure at the local level, but more than that.
Speaker 2: To understand the French metrics we started to diverge in
Speaker 2: the eighties because we build progressively a much more generous
Speaker 2: social model. The main factor of adjustment if you take
Speaker 2: our balance sheet, I would say is clearly pension reforms
Speaker 2: and healthcare system. This is why it was a necessary
Speaker 2: to pass this pension reform. Probably in the next mandates,
Speaker 2: my successor will have to pass another one if they
Speaker 2: want to adjust. But the main focus and I put
Speaker 2: my energy on one point, how to create more activity.
Speaker 2: And during the past seven years, because of our tax reforms,
Speaker 2: because our label laws reforms, because our attractiveness agenda. We've
Speaker 2: been the number one country in terms of attracted nets
Speaker 2: during the past five years. We created more than two
Speaker 2: million jobs when we decreased, even with COVID, even with
Speaker 2: u crenils, by more than two points our unemployment rate.
Speaker 2: So we are converging and for me this is the
Speaker 2: main topic because if we had the same level of
Speaker 2: activity as Germany, we will don't have public deficits and
Speaker 2: it's much smarter to look to work on that than
Speaker 2: being obsessed by a short term adjustment, which is a
Speaker 2: killer for growth. The top priority of the French economy
Speaker 2: should be how to be sure that you improve the
Speaker 2: activity rates of young people because we have I think
Speaker 2: two to three points less than Germany. Your system is
Speaker 2: more efficient, let's be clear. So yes, you need political
Speaker 2: courage and you have to be fair with your people.
Speaker 2: But the solution is not to have a short term
Speaker 2: adjustment by cutting some social expenditure because it's super hard
Speaker 2: without any agenda, or over taxing because we don't we
Speaker 2: don't have a lot of room to maneuver in terms
Speaker 2: of taxation given the fact that we are number one
Speaker 2: or two.
Speaker 3: It depends with Denmark in Europe.
Speaker 1: Yes, the gender I mean the cuts that are being
Speaker 1: proposed just for next year. To make Monsieur Barney's numbers
Speaker 1: add up. We have a squeezing of the deficit by
Speaker 1: sixty billion euros exactly next year, some of which will
Speaker 1: be taxes on wealthy individuals and big businesses. Are there
Speaker 1: are any higher taxes that you would.
Speaker 3: They will discuss that.
Speaker 2: I think having an exceptional taxation on corporate is something
Speaker 2: which is well understood by large companies. If this is
Speaker 2: for one year in given the level of a thought
Speaker 2: which should be made, but it should be limited. And
Speaker 2: we don't have to I mean, we have not to
Speaker 2: forget the reality of our economy, the reality of our
Speaker 2: competitiveness and our position. Just take an OCD comparison. We
Speaker 2: are number one or two in terms of taxation. We
Speaker 2: are not in the best tier in terms of level.
Speaker 3: Of activity and.
Speaker 2: How working participation or house to be worked per year.
Speaker 3: So this is what we have to improve.
Speaker 1: But as you say, the most important things that you
Speaker 1: can do for the long term is the reforms like
Speaker 1: the pension reform, And that is another reason why people worry.
Speaker 1: They look at the cost of the uncertainty of the
Speaker 1: last few months, and you say that the far right
Speaker 1: threat has been contained with this new arrangement. But Marie
Speaker 1: Le Penn wants to reverse that pension reform and tomorrow
Speaker 1: she could call a confidence vote and probably bring down
Speaker 1: the government over that. So do you think that there
Speaker 1: will be an effort to overturn the pension reform?
Speaker 2: I think when you look at the figure sincere with
Speaker 2: people all the reasonable parties, we look at the fact
Speaker 2: that this pension reformed and these key metrics has to
Speaker 2: be preserved, and we have a structure with all our unions,
Speaker 2: and this structure now is very clear and issould figure
Speaker 2: that it was a.
Speaker 3: Necessity to do so.
Speaker 2: And after a dissolution you cannot change the parliament during
Speaker 2: at least one year time. But I want what I
Speaker 2: want to to tell you. If I did not ask
Speaker 2: for this election, I could be in front of you
Speaker 2: and you would tell me, okay, you cannot go for
Speaker 2: election in two and a half years. Look at the
Speaker 2: course they are air and they were in a situation
Speaker 2: to call for a confident vote and force me for
Speaker 2: a dissolution, and I wouldn't answer. Now, we were bold collectively.
Speaker 2: I took my responsibility. I asked often people, do you
Speaker 2: want them to govern. They answered very clearly, no, eleven
Speaker 2: million of my people did vote for them. So it
Speaker 2: means that there is a anger, fears and clearly some
Speaker 2: top priorities that we have to face on security, on
Speaker 2: social justice, on the ground, the situation of our neighborhood
Speaker 2: and on rural areas. And so this is the agenda.
Speaker 2: We will have to fix that the governments in front
Speaker 2: of him, but they didn't give the flow to them.
Speaker 2: And look at the situation everywhere in Europe. Look at
Speaker 2: what happened in Austria, look at what happened in Nezerlands,
Speaker 2: look at what happened in Italy, look at what's happening
Speaker 2: in a lot of lender in your country. So this
Speaker 2: is why I'm a strong advocate of EU growth agenda,
Speaker 2: because this is the only way to give a return
Speaker 2: to our middle classes. Otherwise this is a killer for them,
Speaker 2: and this is the only way to reconcile economy and
Speaker 2: the reality of politics. But don't you think that having
Speaker 2: farmers to which you ask for reforms and efforts, and
Speaker 2: at the same time you expec I will welcome the
Speaker 2: sawyer being coming from Mercursire is the best way to
Speaker 2: kill the far right, I can tell you for my country,
Speaker 2: not at all. And at the end of the day,
Speaker 2: do you think what is the priority today for all
Speaker 2: of us? Delivering grows and political stability, meaning fixing the
Speaker 2: anxiety of our societies and convincing reasonable people in our
Speaker 2: middle classes not.
Speaker 3: To go to the extremes.
Speaker 2: But let's be clear, didn't we deliver collectively good policies
Speaker 2: for our middle classes during decades? We delivered good policies
Speaker 2: to have the maximum of exports, the maximum of profits.
Speaker 2: But they have the feeling sometimes for good reasons. They
Speaker 2: were the adjustment factor of our economy. This is why
Speaker 2: preserving level playing physics, not just sacrificing a lot of
Speaker 2: pieces of our economy where these middle classes work.
Speaker 3: I try to be consistent.
Speaker 1: You have defended very clearly why you took that decision
Speaker 1: to call the election in the summer, and at the
Speaker 1: time you said it was for clarity, and I guess
Speaker 1: some people would say you didn't get the clarity. But
Speaker 1: would you make the same decision again, Yes, because I
Speaker 1: sat in the next two years.
Speaker 3: No, no, no.
Speaker 2: My view is that we have to preserve now till
Speaker 2: the end of my mandate. But it's important because this
Speaker 2: is a new phase of the political modernization of France
Speaker 2: as well. I was elected in twenty seventeen in this
Speaker 2: commitment precisely to go beyond the party system, and I
Speaker 2: gathered with me people coming from the left, the right,
Speaker 2: in the center on a common project. And now the
Speaker 2: question is how to work collectively with not just my
Speaker 2: party but other parties. This is a new way to
Speaker 2: move forward at the Parliament. But this is a very
Speaker 2: positive one for me, and this is the only one
Speaker 2: to provide stability and not to be precisely super sensitive
Speaker 2: to the extremes s time. We need bold reforms and
Speaker 2: the agenda has to be both, and the Prime Minister
Speaker 2: was right to push some key items of this agenda.
Speaker 2: Look at the situation, nothing was sacrificed. All the reforms
Speaker 2: are preserved, and this new government has to work with
Speaker 2: parliament and progressively with build consensus. So I'm not naive,
Speaker 2: I'm a husumance to be optimistic, but I think at
Speaker 2: the same time we have to accelerate to deliver a
Speaker 2: positive the U agendas.
Speaker 1: Mister President, I want to take you right back the
Speaker 1: final question. We've run out of time, but from where
Speaker 1: we started, which was the sense of urgency you had
Speaker 1: in your remarks that you felt everybody in Europe should
Speaker 1: feel about the challenges facing the European growth model. And
Speaker 1: as you know, often in Europe it's a moment of crisis.
Speaker 1: It's when politicians are looking over the ledge that they
Speaker 1: actually have done things. Whether it's the global financial crisis
Speaker 1: or as you mentioned, COVID, the invasion of Ukraine, all
Speaker 1: of those things have forced changed. As an economist, I
Speaker 1: would think that the fact that the EU could be
Speaker 1: forty percent smaller than the US in twenty years time,
Speaker 1: if it carries on like this is a bit of
Speaker 1: a is a crisis, but it's a slow moving one.
Speaker 1: Will it take an outside force to force this kind
Speaker 1: of change? And I wonder in that context, with the
Speaker 1: return of Donald Trump as president, help you get some
Speaker 1: of this done.
Speaker 2: Look, I think it could have consequences of the defense
Speaker 2: and security part of the agenda for sure, good consequences, consequences,
Speaker 2: but I think we should be honestly, I don't want
Speaker 2: to speculate on the US elections. My point more than
Speaker 2: that is that US is a very strong partner. This
Speaker 2: is a very important lie. But whoever will be elected
Speaker 2: and whatever the administration is, I think we have to
Speaker 2: be lucid on our situation. Europe is normal as the
Speaker 2: top priority of the US. The U top priority is US,
Speaker 2: which is normal and unfair. The second top priority is China,
Speaker 2: and for the rest it depends.
Speaker 3: On the moment.
Speaker 2: They are super loyal and reliable partner in Ukraine. Will
Speaker 2: it last, I don't know, but let's be clear. At
Speaker 2: the same time, in Afghanistan we didn't have the call before,
Speaker 2: and in the Ocus deal in Australia, I didn't have
Speaker 2: the call before.
Speaker 3: But it's not a reproach. I try to be lucid.
Speaker 2: The EU is not the priority of the US, and
Speaker 2: this is why part of the wake up call period
Speaker 2: of time we are living and part of what we
Speaker 2: have to completely reshape is our defense and security strategy.
Speaker 2: We are part of NATO, no discussion. We are stronger
Speaker 2: lives the US no discussion, But we have to derisk
Speaker 2: our model from the US agenda. This is why we
Speaker 2: have to invest much more for ourselves. We have to
Speaker 2: create much more European solutions. We have to preserve much
Speaker 2: more our financing for European solutions.
Speaker 3: This is a priority.
Speaker 2: But what you say is very important and this is
Speaker 2: why I try to be vocal. And we moved under
Speaker 2: the pressure of crisis when they were perceived by our
Speaker 2: fellow citizens, the financial crisis and the COVID crisis. You
Speaker 2: all here, business leaders, political leaders, intellectual leaders. Our responsibility,
Speaker 2: your responsibility, our collective responsibility if to explain our fellow
Speaker 2: citizens that this is a symmetric shock for Europe. They
Speaker 2: don't see now the results and the consequences. But our
Speaker 2: responsibilities is to prehend the situation and to act now,
Speaker 2: otherwise it will be a rescue plan in five to
Speaker 2: ten years time.
Speaker 3: And we know the situation.
Speaker 2: The figures are clear, the trends are very clear. So
Speaker 2: our responsibility as leaders is precisely to say, okay, we
Speaker 2: feel the pressure and for me, Europe can make smart
Speaker 2: moves when we have symmetric shock. During the financial crisis,
Speaker 2: don't overestimate. We did react, but we didn't take automatically
Speaker 2: all the right decisions because it was an asymmetric shock.
Speaker 2: And we fixed this crisis much more slowly than the
Speaker 2: US because we were precisely divided between north and South.
Speaker 2: It was a weakness. It was before bunking Union and
Speaker 2: such a level of integration, but it was an asymmetric shock,
Speaker 2: meaning we didn't have the same interest today we can
Speaker 2: have in the nitty gritty some different interest. You are
Speaker 2: much more invested in car making business. Fine, which creates
Speaker 2: this kind of discrepancy. But in reality we are already
Speaker 2: aligned because it's already too late. If I'm fair, it's
Speaker 2: already too late. So we should be aligned and just
Speaker 2: look at the situation. Whatever our differences in the energy
Speaker 2: system could be or industrial system, this is a symmetric
Speaker 2: shock for the European societies and economies. So we have
Speaker 2: to precisely deliver this in depth reform on our governance,
Speaker 2: on security and defense and the growth model, if just
Speaker 2: we want to deliver for our people, and this is
Speaker 2: the best way, by the way to help all the
Speaker 2: countries precisely to limit and get rid of the extremes
Speaker 2: because they are just held by the recent amount of
Speaker 2: people and the lack of collective efficient.
Speaker 1: Ladies and gentlemen, you've had your marching orders from mister President,
Speaker 1: and I think we have we've run out of time,
Speaker 1: so thank you very much, mister President, and Las Hendricks
Speaker 1: very much. Thanks for listening to this week's photonomics from Bloomberg.
Speaker 1: This episode was hosted by me Stephanie Flanders, with a
Speaker 1: Legra Stratton and Adrian Mordridge. It was produced by Samma
Speaker 1: Sadi with production support from Chris Martlou and Isabella Ward.
Speaker 1: Sound design by Moses and Am and Brendan Francis Newnham
Speaker 1: is our executive producer. Sage Bowman is head of Bloomberg
Speaker 1: Podcast and this week we have special thanks to Julia Manns,
Speaker 1: the Berlin Global Dialogue, President of France, Emmanuel Macron and
Speaker 1: Lars Henrik Roler. Please subscribe, rate, and review this podcast
Speaker 1: wherever you listen to it.