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