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When he was first elected leader of France in 2017, President Emmanuel Macron promised nothing short of revolution. Since then, he has pushed through questionable pension reforms, cut taxes and made it less difficult for French companies to lay off employees. Now, it’s aiming beyond France.
On the sidelines of the Choose France summit in Versailles, Macron speaks to Bloomberg editor-in-chief John Micklethwait about his ambitious plan for Europe. And he’s issuing a stark warning about what could happen if Europe’s economic expansion fails to hold up. – not only for the continent, but also for global security.
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Here’s an edited transcript of the conversation:
David Gura: Emmanuel Macron promised a “revolution” when he first ran for president of France in 2017
MACRON’S TAPE, ON THE ROAD
Gura: “Revolution” was also the name of Macron’s memoirs, and in this book, as well as on the election campaign, Macron advocated primary structural reforms for France. Since then, it has cut red tape, cut taxes and made it less difficult for French corporations to fire workers. Last year, Macron managed to get parliament to approve. . . a debatable increase in the retirement age in France, from 62 to 64. Well, making adjustments like that, it wasn’t easy.
2023 EVENTS
Gura: But despite internal reluctance, Macron did not prevent it. Now it’s aiming beyond France’s borders. It speaks of the desire to reform Europe as a whole. Lionel Laurent is a Paris-based columnist for Bloomberg Opinion. As always, he says, satan is in the details.
Lionel Laurent: France has all the trump cards, I would say, to shine in this new geopolitical global as a European leader. The problem, as always, is only authenticity, the last obligatory step to achieve one’s goals.
Gura: One of the measures taken through Macron is to inspire foreign investment at an annual event he organizes called Choose France.
Laurent: It’s been going on since you took over as chairman and your speech has been, uh, kind of an investment banker’s speech. This essentially means that France is a country that is open for business and that it is implementing reforms.
Gura: And many corporations have chosen France. The country has one of the main destinations for foreign investment in Europe. On Monday, in the context of Versailles, Macron argued before an organization of leaders, and Bloomberg editor-in-chief John Micklethwait. – that his plan would turn Europe into a monetary powerhouse that could rival China and the United States.
Emmanuel Macron: What I want to say is: “We have kept our word. We delivered, and we will succeed. “
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Gura: On the show today is President Emmanuel Macron’s revolution – his ambitious vision for the European economy – and his pressing warning about what could happen if global leaders don’t heed his call. My calling is David Gura and this is “The Big Take” from Bloomberg News.
Gura: Bloomberg editor-in-chief John Micklethwait met Emmanuel Macron years ago. Long before he was the youngest president of France.
John Micklethwait: I’ve known him for a long time, I think about 20 years, and he’s someone who sought to replace the way corporations – the global business network – understand France. But it also replaces the way France understands global trade.
Gura: I called John right after his meeting with Macron on Monday and he told me that, given his long history, he was fascinated by the evolution of Macron’s goals:
Micklethwait: You think your real project now is to try to replace Europe as much as you do France.
Gura: John spoke to Macron on the sidelines of this summit with business leaders, and this year Macron announced a record €15 billion in new investment from some heavyweights, Microsoft added. John told me that this environment is designed to send a message. :
Micklethwait: I told some French friends that I was seeing him at Versailles and they said, come on, really?Uh, the fact is, Versailles tends to be a symbol, so it doesn’t get much spread at home. But Versailles works wonderfully when you bring in foreign bankers and things like that. So that’s probably the kind of explanation for why it was there. Yes, to some extent he was following in the footsteps of Napoleon Bonaparte.
Gura: But foreign investment in France is not the only factor about which Micklethwait questioned Macron. As I’ve heard, they’ve gone much further, covering everything from the world’s richest man, implying he’s not Elon Musk, to the long-term Europe.
Micklethwait: President Macron, thank you for speaking with Bloomberg. At its annual “Choose France” convention for foreign investors, we offer foreign investors. And for as long as I’ve known him, he’s sought to prepare France to love business more, but also business. And you look and see what’s going on here.
You’ve had a lot of successes. You are about to trumpet €15 billion of investment in France. But you also know that France has problems. The economy is developing a lot. Since you arrived, the economy has grown almost as fast as that of the United States. It still has a state that accounts for 57% of GDP. And there are all those red tape, which your government says it needs to get rid of. , which is equivalent to approximately 3% of GDP.
So how do you convince other people in France about this?
Macron: We’ve carried out a lot of reforms from the beginning, tax cuts in 2017, a flat tax on capital gains, we’ve reduced the corporate tax from 33. 3 to 25 percent. We have made many reforms in the labor law and after COVID ended. the last two years. We have delivered, we are delivering, and we will deliver. So it’s an ongoing job, but I see where we’ve come from and where we need to go. France was obviously in Europe because of too much bureaucracy, a strong system, a lot of assets, but a lack of competitiveness. I don’t think we’re obviously on a par with the others. And now we are among Europe’s leaders.
Gura: The reforms envisaged by President Macron do not prevent cadres and taxes. He also believes that investments are essential for innovation and business expansion in France. This would likely involve banking reform.
But here too Macron faces a multitude of regulations, only in his own country, but also within the EU. Something he and John also discussed:
Macron: I mean, in terms of public reports and figures, we want 1 trillion more in terms of budgets, in terms of spending, and at the same time, we want to make the Capital Markets Union a reality, which is not yet the case.
Micklethwait: Can I participate in the Capital Markets Union?Because you have an example here. . . You’ve got BNP.
Macron: Yes.
Micklethwait: Today, it’s probably the most successful bank in Europe and, indeed, in the eurozone, worth $80 billion. But you know you’re entertaining other people like JPMorgan, etc. JPMorgan is worth $550 billion. That’s nine times bigger. Bank of America, 4 times larger. And the explanation of why BNP Paribas can’t expand the European Union and acquire other banks.
Macron: That’s true. We have several problems.
Micklethwait: You’d like to see BNP take over one of those banks. . . take over a German or Italian bank.
Macron: I mean, we want consolidation, but we also want a genuine internal market like the European one, which is the case. We have to deal with 27 regulations. You know, our view is that we now want to have a single system of solutions, a single supervisory system and a much more integrated Capital Markets Union.
Micklethwait: Would you be satisfied, let’s say, with the arrival of Spanish Santander and the acquisition of Société Générale?I mean, from then on
Macron: It’s part of the market, but by acting as Europeans we want to consolidate ourselves as Europeans.
Micklethwait: So, it may just be cross-border mergers in either direction.
Macron: Yes, of course.
Gura: Mergers in any direction. . . Unlike the U. S. , where the banking sector has been consolidating for years and banks are now among the largest corporations in the world, in Europe there are strong barriers that make it difficult for banks to do their jobs. work of one country to win banks of another. This implies real limits to the expansion of European banks. Macron has spoken out against it.
Macron told John that bigger banks, a more efficient credit system and easier monetary risk-taking are key to economic expansion in France and Europe if they are to start competing with countries like the United States and China.
Macron: In addition to this union of capital markets and simplification, with an herbal single market, we obviously want the same points game box as in the US. UU. De the contrary, it’s a killing for risk-taking because those regulations just save you, I mean. , from taking risks at our banks to investing in stocks, which is precisely what we want.
And if we take the key to this difference between the United States and Europe, the key is the fact that the American economy has innovated and invested much more in justice and innovation than the European economy. And we want this new economy style for Europeans. More innovation, more investment, a single market and a capital markets union.
Gura: Although Macron has pushed for reforms and innovation, it is the more classic French corporations that have flourished under his presidency. Here’s something John discussed with Macron:
Micklethwait: I’ve observed and no one did Macron’s presidency more than Bernard Arnault. This is the case now, his wealth has exceeded 170 billion euros.
And now he is the richest man in the world, probably the first Frenchman to win this honor since Napoleon. And I think we can say bravo to Mr. Arnault, he did it in a less violent way. But it’s interesting. When you look at the other people who, at the top, are the richest people in France, they are most often heirs, are in fashion, or either.
And I wonder if this is the kind of France that you’re communicating about your creation. You communicate about technology, but the ones that have really succeeded are those companies that are outdated.
Macron: You’re right. I don’t think it’s an old taste in business, but it’s a business in which we have a competitive advantage, luxury, fashion, etc. , because France is one of the most productive countries. And Bernard Arnault consolidated this market very early. He was one of the pioneers of this industry. And I think that’s fine. And it’s a possibility for us because, first of all, we’re talking about a lot of jobs that are located in France, because a lot of those jobs will move elsewhere.
When you talk about alcohol, when you talk about cognac, armagnac, champagne, fashion and all that kind of stuff, it’s an extra price. These are low-skilled and high-skilled jobs. And thanks to their directory in France, we are consolidating a lot of prices and also price creation.
And that’s why, thanks to Total, LVMH, BNP, etc. , we are the second largest company in the world.
Gura: That’s President Macron’s speech to global business. After the break, I ask John if this will be enough to convince more foreign investors to invest their money in the country. And what it may mean for the long term of Macron’s presidency. and for the long term of Europe.
Gura: We just heard Emmanuel Macron’s speech to business leaders. Less so for corporations and banks. Let’s let corporations grow, take more risks. I asked Bloomberg editor-in-chief John Micklethwait to put it in a broader context:
Gura: As a candidate, John, he called for a revolution. Eh, what was that revolution at the time, and how much has it evolved or replaced until today?So, you communicate about the vision you have for Europe. To what extent is this an integral component of what you laid out in the 2017 election campaign?
Micklethwait: I think the vision of his arrival when he arrived was much more about France. It’s a question of inventing a kind of new France, a France more comfortable with capitalism. I wanted to fuse this with social democracy, a bit like Tony Blair. If you said Thatcher, I’d run a mile, but there’s a little bit of that too.
And you know, he’s going to point it out. He has cut taxes. He did all those things. He did, you know, now we have a Frenchman as the richest user in the world in the user of Bernard Arnault. Uh, we have a lot of other things in Paris that are doing pretty well. Paris gained a bit compared to London. , I think it probably is. . . We shouldn’t overdo it, but it’s pretty well done.
But I think more and more that Macron was motivated by the realization that not much would happen in France without also converting Europe.
Gura: It takes into account the economic realm, but also the geopolitical terrain. And in fact, we’ve seen him speak out more and play the role of a diplomat in the context of Russia’s invasion of Ukraine. How does he behave today as an economic politician and a political statesman?
Micklethwait: He sees him as very connected. At one point, I asked him if Europe’s sclerotic economy posed a greater danger than Putin, and he avoided that answer. But I think he sees it all together. He thinks his vision of Europe is that of a country that has tried to play by the rules and is now being abandoned by China and the United States, neither of which, he says, plays by the rules.
Europe will therefore have to come together. And that means being a lot tougher. When it makes industrial agreements with both, especially with China, but also with the United States. And in the same way, it will have to reform itself within the wall that it needs to create around Europe. therefore, you need to see more competition. It also needs more advocates to emerge, and the one we’ve talked about here is the banking sector. But we’re also talking about energy and luxury goods.
Gura: As we mentioned, one of the headlines of John’s meeting with Macron was the president’s acceptance of the idea that a French bank – in this case, Société Générale – could simply be bought through a foreign owner. The example used by John is that of the Spanish bank Santander. This will certainly attract attention, but it is emblematic of what Macron sees as imperative to reform the entire European economy. After the interview, I asked John how he imagined he was going to land:
Gura: Can you explain how this message resonates with the leaders you brought to France for this conference?
Micklethwait: I think so, I think it resonates a little bit. You know, some businessmen will enjoy some of it. Other people won’t like others. Then there are all the allies, the others, especially in Germany, would say, yes, it’s typical of Emmanuel Macron. He’s going to give great speeches about the need for festivals in Europe and the need for national champions. Overall, though, it needs French champions over others when in practice, you know, your government has vetoed the merger of supermarkets for national security reasons. So, you know, it’s a little bit shaped in that sense, you know, in For his part, we can say that to say that he’s fine, that someone can just take over Société Générale is a sign that he’s gotten over the situation.
Gura: But John told me that the president’s proposals to erect more industrial barriers to fight what he sees as unfair practices in the U. S. and China have been a wake-up call:
Micklethwait: I mean, just to take the example of the richest guy in France and, you know, the biggest company in France, LVMH. Hey, it’s like Clarins, like L’Oréal, like all those other Hermès, all those others. Wonderful French houses of fashion and luxury. You know, they’re a big hit because of globalization. And I think they’re concerned if Europe erects a barrier saying, “We don’t need Chinese electric cars. “Well, China is saying, well, we don’t need their bags or their cognac either, or at least we need to apply price lists to them. So there are safe sectors of the French economy, and even the European economy, that would feel in some way threatened by this. I guess.
Gura: But Macron’s revolutionary spirit has been met with common protests, political reality, and a deep drop in his approval ratings.
Gura: How is this message perceived through the French beyond the gates of Versailles?We see the polls of President Macron. We see that the political terrain is transforming in France. To what extent do you count on this potential success, by attracting more foreign investment and strengthening your political perspectives?
Micklethwait: That’s a really smart question. // As you point out, this is the kind of French public that, or right now, if the polls are to be believed, will most likely stick to Macron, or there will be others, they won’t. I doubt, but, you know, Marine Le Pen is sitting there, uh, right now, that’s the maximum probably, albeit by plurality. And it’s true, Le Pens have been beaten before in the last round. But I think it shows a lot of discontent in the French world in general. And this poses, I think, some upheavals for Macron in terms of his legacy. The first is what will happen if he becomes better known for what he was when he was elected and maybe in the same way as Barack Obama and after him, everything falls apart because, just as Barack Obama was attacked by, uh, Donald Trump, then they may just be attacked by Le Pen.
Gura: To learn more about our interview with Emmanuel Macron, read The Big Take on Bloomberg Terminal and on Bloomberg. com. Now, before I go, I have some interesting news. At Big Take, tomorrow we’re launching a new screen: Big Take Asia. My co-host, Sarah Holder, is here with me in the studio.
Sarah Holder: Hi David, this is a wonderful time for our entire team. One of my favorite things about running at Bloomberg is that we have journalists all over the world.
Gura: I think in over a hundred offices, the last time I checked. . .
Holder: Working to give them policies with a truly global perspective. We’ve heard some enlightening episodes from Asian countries here on The Big Take over the past few months. Gura: And now we’ll have them all, and every week. Oanh Ha will be joining us as a presenter. It is founded in Hong Kong and has been covering the region for up to 15 years. Every Tuesday, he will take his listeners on a deep dive into some of the world’s most dynamic economies.
Holder: And the markets, the tycoons, that drive this ever-changing region.
Gura: The first episode will be out tomorrow! You can locate Big Take Asia if you pay attention to podcasts.
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