French President Macron on EU Spending, Banks M&A, China (Full Interview)

Summary

In a discussion with Bloomberg, French President Emmanuel Macron outlines his vision for France and Europe amidst global economic challenges. He highlights the reforms France has undertaken since 2017, including tax cuts, labor law changes, and adjustments to pension and unemployment schemes. Macron emphasizes the need for Europe to be more innovative and competitive, advocating for a single market and capital market union to boost investment and productivity. He also addresses the importance of a balanced approach to decarbonization, ensuring growth is not hindered by overregulation. Furthermore, he discusses the necessity for a fair trade policy, particularly concerning China, where he calls for reciprocity in tariffs and production rules to protect European businesses from unfair competition.

Takeaways

• 📈 President Macron emphasizes France's commitment to reforms since 2017, including tax cuts and labor law changes, to improve the business environment.
• 💹 Despite economic challenges, France has attracted €15 billion in investments, showcasing its ongoing efforts to make the country more business-friendly.
• 📉 France's economy has grown at about half the pace of the U.S. since Macron's term began, highlighting the need for further growth and competitiveness.
• 🤝 Macron stresses the importance of not only making France more business-friendly but also making businesses more inclined towards investing in France.
• 💼 The French state's high share of GDP (57%) and bureaucratic red tape, which is about 3% of GDP, are identified as areas needing reform to improve attractiveness to investors.
• 🔍 Macron outlines a vision for France and Europe to become frontrunners in innovation and investment, addressing the gap in value per capita created compared to the U.S.
• 🌱 A focus on climate, digital growth, and job creation as the three pillars of policy to drive the European economy forward.
• 💡 The need for a European policy that fosters innovation, efficient capital markets, and investment from both a common budget and the private sector.
• 🚀 Macron calls for a reset of the European economic model to increase value creation, innovation, and job quality, in light of changing global dynamics.
• 💰 He discusses the necessity for a more integrated capital market union in Europe, to allow for the consolidation of banks and a single system of resolution and supervision.
• 🤝 Macron expresses openness to cross-border mergers and acquisitions within the EU, as part of efforts to consolidate and strengthen European businesses.

Q & A

What is the main focus of President Macron's efforts in preparing France for business?

President Macron's main focus is to make France more business-friendly while also encouraging businesses to invest in France. This involves reducing bureaucracy, implementing tax cuts, and making reforms in labor law, corporate taxes, pension schemes, and unemployment mechanisms.

How does President Macron view the current state of France's economy in comparison to the US?

President Macron acknowledges that France's economy has not grown as rapidly as the US since he took office, with France's growth being roughly half as fast. He points to a lack of innovation and investment as the primary reasons for this disparity.

What are the key reforms President Macron plans to launch in the near future?

President Macron plans to launch a new set of labor market reforms and a simplification and attractiveness package for finance. He also intends to prepare for further reforms on the labor market in September.

How does President Macron perceive the European economy in comparison with the US and China?

President Macron sees Europe as lagging behind the US and China in terms of innovation and investment. He emphasizes the need for a more innovative European policy, more efficient capital markets, and greater investment from both a common budget and the private sector.

What is President Macron's stance on the European single market and capital market union?

President Macron supports the consolidation of a single market and capital market union in Europe. He believes that there should be a single system of resolution and supervision to create a more integrated market. He also sees the need for a Franco-German consensus on this matter.

How does President Macron respond to the idea of French companies like Total moving their primary listing from France to New York?

President Macron expresses his disapproval of such a move and states that he would be very surprised by it. He suggests that rumors of Total's CEO considering such a move are not based on confirmed information.

What is President Macron's view on the wealth accumulation in the luxury and fashion sectors in France?

President Macron sees the success of individuals like Bernard Arnault, whose wealth has increased significantly, as a positive development. He highlights that these sectors provide competitive advantages for France and create jobs that are difficult to relocate.

How does President Macron address the issue of reciprocity in trade with China?

President Macron advocates for a level playing field in trade with China, emphasizing the need for fair competition in terms of tariffs, subsidies, and rules of production. He seeks reciprocity and modern technologies to ensure fair trade practices.

What is President Macron's perspective on the role of innovation and productivity in Europe's economic growth?

President Macron believes that innovation and productivity are key to Europe's economic growth. He stresses the need for more investment in these areas, both from public and private sectors, and for a new business model that emphasizes innovation, investment, and a single market.

How does President Macron view the necessity of a tougher European stance towards trade?

President Macron sees a tougher European stance as necessary not out of protectionism, but to protect the region from unfair measures and to ensure the survival of European businesses in the face of global competition.

What is President Macron's approach to dealing with the challenges posed by globalization and the changing geopolitical landscape?

President Macron's approach involves continuous reform and adaptation to the evolving geopolitical landscape. He emphasizes the importance of innovation, investment, and a unified European policy to address the challenges of globalization.

Outlines

00:00

🇫🇷 France's Business Reforms and Competitiveness

President Macron discusses France's efforts to make the country more business-friendly and competitive. Despite the challenges of a slower economy and a high state share of GDP, Macron highlights successes such as €15 billion in new investments, tax cuts, and corporate tax reductions. He emphasizes the importance of labor law reforms and the need for continued reform in areas like the labor market and financial sector to maintain France's position as a frontrunner in Europe.

05:03

💼 European Economic Model and Capital Market Union

Macron addresses the need for a new European economic model that focuses on innovation, productivity, and job creation. He stresses the importance of a capital market union and the consolidation of European banks to compete with larger global institutions. Macron also discusses the need for a single market approach and the removal of regulatory barriers to create a more integrated and efficient European economy.

10:05

🌱 Decarbonization and Energy Policy

The conversation shifts to decarbonization, with Macron advocating for a balanced approach that does not pit growth against environmental concerns. He emphasizes the role of renewable and nuclear energy in creating a low-carbon, cost-effective, and sovereign energy supply. Macron also calls for increased investment and a more serious approach to climate change, aligning US and European regulations for a synchronized effort.

15:06

🤝 Fair Trade and Geopolitical Tensions

Macron discusses the importance of fair trade and a level playing field in international relations, particularly with China. He calls for reciprocity in terms of tariffs, subsidies, and production rules to ensure fair competition. Macron also addresses the potential for trade tensions and the need for Europe to adopt a tougher stance to protect its interests, while maintaining a focus on creating value and jobs.

Keywords

💡Choose France

Choose France is an annual conference aimed at foreign investors, highlighting France as an attractive destination for business and investment. In the script, President Macron discusses the successes of this initiative, including €15 billion of investment in France, which is a testament to its effectiveness in fostering a business-friendly environment.

💡Economic Growth

Economic growth refers to the increase in the production of goods and services in an economy over a period of time. The script mentions that France's economy has not grown as much as America's since Macron came into power, indicating a key area of concern and potential for reform to enhance the country's economic performance.

💡State's Share of GDP

The state's share of GDP represents the proportion of a country's economic output that is controlled by the government. The script highlights that France has a high figure at 57%, which is a point of contention for those advocating for less bureaucracy and more private sector involvement in the economy.

💡Red Tape

Red tape refers to excessive bureaucratic procedures or regulations that hinder or slow down activity. In the context of the video, red tape is identified as a problem that the French government aims to reduce, with its cost estimated to be around 3% of GDP, indicating its significant impact on the business environment.

💡Labour Market Reforms

Labour market reforms involve changes to laws and regulations that affect the employment relationship, working conditions, and job market dynamics. President Macron speaks of new reforms being launched to improve France's labour market, which is crucial for making the country more attractive to businesses and fostering job creation.

💡Innovation

Innovation is the process of translating an idea or invention into a good or service that creates value. The script emphasizes a lack of innovation as a reason for Europe's slower economic growth compared to the US. Macron stresses the importance of innovation as a key priority for the future of the European economy.

💡Capital Markets Union

The Capital Markets Union (CMU) is a framework intended to create a single market for capital across the European Union, fostering investment and economic growth. The script discusses the need to make the CMU a reality to enable more efficient capital allocation and to compete with the US and China on a global scale.

💡Decarbonization

Decarbonization refers to the process of reducing the amount of carbon dioxide emissions, typically through the use of clean energy sources. The script mentions Macron's goal to accelerate decarbonization, particularly through renewable and nuclear energy, to achieve a low-carbon, cost-effective, and sovereign energy supply.

💡Reciprocity in Trade

Reciprocity in trade means that two trading partners agree to remove certain trade barriers or apply the same regulations to each other's goods and services. Macron discusses the need for fair competition and reciprocity in trade, especially with regard to China and the US, to protect European industries and ensure a level playing field.

💡Luxury and Fashion

Luxury and fashion are sectors where France has a competitive advantage, as indicated in the script. The success of French luxury goods and fashion companies, such as LVMH, is highlighted as a positive aspect of the French economy, contributing to job creation and value addition within the country.

💡Globalization

Globalization is the process by which businesses or other organizations develop international influence or start operating on an international scale. The script touches on how French companies have benefited from globalization through export, particularly to China, but also the challenges posed by protectionist measures and the need for a balanced approach to trade.

Highlights

President Macron discusses France's efforts to make the country more business-friendly and attract more foreign investment.

Macron highlights €15 billion of new investment in France, despite economic challenges.

The French economy has grown at about half the rate of the US since Macron took office.

Macron emphasizes the need for France and Europe to be more innovative and competitive.

France has made significant reforms to tax, labor laws, pensions and unemployment since 2017.

Macron says France is now a frontrunner in Europe, having bridged the gap with other countries.

The President calls for a more unified European policy to boost innovation, capital markets and investment.

Macron stresses the need for Europe to accelerate decarbonization and develop a low-carbon energy policy.

He argues for a more integrated capital markets union in the EU to boost efficiency and investment.

Macron says France is open to cross-border bank mergers within the EU to create a banking union.

The President criticizes the US and China for not fully complying with WTO rules and calls for a tougher EU trade policy.

Macron expresses concern about Total's CEO considering moving the company's primary listing from France to the US.

He emphasizes the importance of not overregulating businesses, especially in the green economy.

Macron praises LVMH's success under his presidency and its contribution to job creation in France.

The President acknowledges the tension between promoting globalization and protecting domestic businesses from unfair competition.

Macron calls for reciprocity in trade relations with China, including fair tariffs, subsidies and production rules.

He stresses the need for Europe to get tougher on trade to protect its markets and businesses from unfair measures.

Macron says the goal is not protectionism, but defending Europe's interests and ensuring a level playing field.

Transcripts

President. Macron, thank you for talking to

Bloomberg. We're here your annual Choose France

conference for foreign investors. And as long as I've known you, you have

always wanted to prepare France to like business more, but also business to like

France more. And you look and you see what is

happening here. You have had many successes.

You are about to trumpet €15 billion of investment in France, but you also know

France has problems. The economy is not growing that much.

The economy since you came in has grown roughly half as fast as America.

You still have a state that takes up 57% of GDP and you have all that red tape

which your government says it wants to get rid of.

It is around 3% of GDP. So how do you persuade people to choose

France against that? Thank you very much for being here in

this Versaille Castle. This is quite a good read that you just made.

We delivered a lot of reform since the very beginning, 2017,

tax cuts, flat tax on capital gains. We decreased from 33.3 to 25%

corporate taxes. We made a lot of reforms on labour law.

And after COVID during this the past two years with inflation war in Ukraine, we

passed the reform and on pension scheme and unemployment mechanisms,

I don't see a lot of countries around us, around us having done so.

So you don't just want to be compared to Europe, do you?

No, no, no. My point is my point is just to say we

delivered, we do deliver and we will deliver.

And this is why we will launch this week a new bunch of reform on labour market.

We will launch a new bunch of simplification and attractiveness

package for finance and we will prepare for.

We have already launched new simplification and we will prepare for

September a new bunch of reform on labour market.

So it's a permanent work, but I see where we come from and where

we want to go. France was lagging behind clearly in

Europe because of too much bureaucracy, a

strong system, a lot of strengths, but lack of competitiveness.

I think we - I don't think , I see that we clearly bridge the gap with

and now we are frontrunners in Europe. My my concern is not just France, is

Europe in comparison with US and China. And this is a point you mentioned during

the past decades. If you take

the last few decades, we we created half of the value per capita created by the

US. Why?

Lack of innovation, Lack of investment. This is the main reason.

This is why now my top priority is to have a European policy saying we have to

be much more innovative. We have to create a much more efficient

capital markets. We have to invest much more from a

common budget. As Europeans and from the private

sector. And we have to deliver in the

combination, because I do believe that climate, digital growth and job creation

are the three pillars of what we have to deliver. And those we will go through all of

those. But just on that point about the

European economy, you had a full scale attack on it at the Sorbonne where you

said it is sclerotic, it is being left behind.

Do you think that from the EU's point of view, the that sclerotic economy is a

bigger long term challenge?

I think this is clearly linked to what's happening as

well. But we have to

completely reset our model. I think now France clearly is one of the

leading economies. We are number one in that activeness.

We have been number one during the past five years.

And if you take job creation growth, we are

one of second in in the eurozone. Do you are being pulled back?

So we are here now.

When I think Europe and especially the EU as a whole, but it's for as well for

UK, we have this issue in terms of business model.

Why? Because we had.

Low cost energy sinks to ratio production sinks to southern and eastern

European countries with quite low costs, a market for exports to China and a

geopolitical umbrella US. These plans are being completely

revised. Totally, yes.

And it's no more valid. So we have to reinvent what and how by

creating much more value on our own, by being much more innovative, by creating

much more jobs and jobs with very good jobs, I would say, on our continent.

The key point is deliver much more innovation and productivity policy,

public and private. So the second key reforms is to

accelerate decarbonazion, and especially our electricity policy,

because through renewable and nuclear energy, we can deliver low carbon

sovereign and low cost energy, which is much more than importing gas and and

fossil fuels. So we need much more investment based on

common budget, in my view. I mean, based on public reports and

figures, we need 1 trillion more in terms of budget, in terms of

spending. And in parallel, we have to make the

capital market union a reality which will not get to. Can I come in the

capital market union because you have here an example.

You have BNP. Yeah.

Now probably Europe's and definitely the eurozone's most successful bank worth

$80 billion. But you know, you are entertaining these

people like Jp morgan and so on. Jp morgan is worth 550 billion.

It's it's nine times as big Bank of America four times as big.

And the reason why is BNP Paribas cannot expand throughout the European Union and

take over other banks. This is very true.

We have several issues. You would like to see BNP take over one of these,

take over a German bank or an Italian one.

I mean, we do need a consolidation, but we do need as well an

actual domestic market as Europeans, which is not the case.

We have to deal with 27 regulations, you know, and energy finance

and and and and telco, also key sectors where single market doesn't exist.

It was a choice at the very beginning. I do agree that we have now to open this

box and to deliver single market approach, but we are much more

efficient. So I'll view is that now we want to

elaborate a Franco-German consensus on capital market union to have a single system of

resolution, a single supervision and a much more integrated

capital market union. Would you be happy with, say, Spain,

Santander coming and buying Societe Generale?

I mean, part of that it's part of the market, but dealing as Europeans means

that you need consolidation as Europeans, you're not.

So it could be cross-border mergers for directions, but this one is for banking

union. It's already on track.

Now we have to do it for capital markets union, which is broader.

Yes, and even more difficult. But we started to do so at a political

level during the last council. And I do believe that we can find a

Franco-German agreement. But why?

I want you to just understand the challenge first. 75% of our financing as

Europeans go through banks and insurance.

So we need much more consolidation, but we need a clear circulation of the

savings all around the place. So this is the first objective to be

much more efficient and to be sure that our savings will be invested in the

right sectors, in the right geographies. Second, every year, 300 billion savings

goes to finance the US economy because we are not attractive.

So on in parallel with this capital market union and the simplification,

having a national single market, we clearly need the same level playing

field as the US in terms of financing, which means when you take solvency in

Basel, as long as it is not implemented by the US competitors, it cannot be

implemented by the European competitors. So why is this is a killer for risk

taking? Because these regulations just prevent

you, I mean our banks, from investing in equity, which is exactly what we need.

And if you take the key driver of this difference between the US and Europe,

the key driver is the fact that the US economy innovated and invested much more

in equity and innovation than the European economy.

I think we did much better during and post Covid than what we did during the financial

crisis. But now this is a totally new world and

we do need this new business model for the

Europeans. More innovation, more investment, single

market and capital market union, and a relevant trade policy.

Because I want to add this point.

No. The US and China are compliant with WTO

today. We are the only one in the room to

respect this

just the regulation of WTO. And we are too naive, if we are too open

both of them, protect the players and their economies.

We have to do this. Can we come back to the to the issue of

China later? But just on another French company

Total, you mentioned energy. Total's CEO has talked about moving its

primary listing away from France towards New York.

Would you be happy with that? Not at all.

And I would be very surprised. No, I wait for any confirmation.

I understood it was rumors. So but it's interesting that it's time

we would idea that he would face extra ESG measures here that he would not face

in America. So think that would affect his valuation.

Do you mean that we are more so used in the US in terms of green economy and

transition? Yes.

That you also in your speech at the Sorbonne, you said, as I paraphrase, you

said, you cannot let decarbonization and growth be enemies.

And this was exactly an example. And this is my point.

But the point is just we have to be sure when we regulate, we should not

overregulate. Yes.

And I think now we have to deliver. We need in Europe much more investment.

We have to have more flexibility. But in parallel, everybody has to be

serious. I saw a lot of firms, a lot of asset

managers saying, we are with you on climate change.

Where is the beef? Are you sure you are sufficiently

compliant? Are you sure you are clearly addressing

the same issues? This is my point and this is why we need

to high synchronization between the US and Europe.

The only synchronisation is number one, the US regulation in terms of climate

change as it should be more serious and realigned with the European ones.

Second, the Europeans have to invest much more and be more serious and

realign themselves on the US. I just ask you about another French

company I have asked you about Total and BNP LVMH.

I looked and nobody has done better under the Macron presidency than

I know he's now his wealth has increased by €170 billion and he is now the

richest man in the world, probably the first Frenchman to have that honour

since Napoleon. And I think we can both say bravo to Mr.

Arnault. He's done it in a more peaceful way.

But it's interesting, you look at the people who are right at the very top of

the wealthiest people in France, mostly either as or in fashion or both.

And I wonder whether that is the kind of France you talked about creating.

You always talk about technology, but the people have done really well as

these old style businesses. You're right, all of them.

I don't think it's all style of business, but it's it's a business where

we have competitive advantage, luxury, fashion and so on, because France is one

of a great place. And then Arnault consolidated this

market very early. It was one of the the frontrunner in

this industry. And I think it is very good.

And this is a chance for us because first we speak about a lot of jobs which

are located in France because a lot of these jobs are

impossible to be relocated elsewhere. When you speak about alcohol, when you

speak about cognac, maniac, champagne, fashion and and and making a lot of this

stuff, it's added value. It's low qualified and very qualified

jobs. And in parallel, it consolidated the market

elsewhere. And thanks to the fact that is listed in

France, we consolidate a lot of value and value creation as well.

And this is why thanks to Total, LVMH, BNP and so on.

We are the second largest flat place of the world to list your company.

But there is a there is a tension, isn't there?

If I look at all those people or certainly as LVMH carrying all those

ones, they have done spectacularly well by exporting to places like China.

They've done very well out of globalization and all the.

Chris prescriptions you were just talking about in terms of Europe having

higher trade rules, being tougher with China.

You know what will happen in a couple of months time?

The Europeans will say we want to put tariffs on electric vehicles.

And what will happen is, Mr. G, despite what he may have told you

last week, he will come back and he will he will put tariffs on cognac and that

will help those those very sick, sensible French businesspeople.

Look, I think this is exactly the mistake we made 20 years ago on solar

panels, and we kill doing this there. I'm very simple.

I don't lecture and blackmail anybody. I just look at the picture.

When you have tariffs of ten for your electric for Chinese electric vehicles

entering into our markets, and when you are taxed between 15 and 24, when you go

to the Chinese market, you have an issue.

And on all the different sectors, what we want is just reciprocity.

We want and in fact, modern technologies.

And regarding the relation with China, a

level playing field. So what we ask for is exactly that.

We want to be sure that in terms of tariffs, subsidies, rules of production,

we have a fair competition. And I mentioned it very openly to

prison. So it is not a geopolitical agenda.

We don't want to blackmail and push back some some of the production.

We want to be sure it is fair. It's fair to launch precisely inquiries

and and look in details the situation and revised.

If we are weak, if we are threatened by the fact that you can be you can have

great torsion measures, you just don't do what you have to do.

We had this discussion and this is why they decided not to implement the first

measures on cognac, but to withdraw the first one.

So I think it's a normal approach. But look at the situation today.

The European Union is the most open place of the world, but you cannot

survive if at the same time you have subsidies and overcapacity in China and

protection in some part of the Market and Inflation Reduction Act and by

American Act in the US, it doesn't fly once again.

So Europe has got to get tougher now. But this is a necessity not because we

are protectionist, but just because we want to protect our region.

The Germans do not agree with you about that.

I think it depends who in Germany and for which perspective.

It's totally true that some German companies, when they are incorporated in

China, for instance, benefiting from subsidies, not just German, European,

American, their interest is probably to preserve that and to sell themselves

that overcapacity in China to the rest of the world, and especially the

European markets. But the German economy's interest is

totally aligned with the French economy's interests, meaning creating

jobs, creating value, but just protecting your business and your people

when they are attacked by unfair measures.

And it's it's normal. It's part of the business.

So for me, it's just a no brainer. It's a very interesting journey watching

you make the French love business more and business love France more.

Thank you very much for talking to Bloomberg. No, thank you.

It's very important. Thank you for being here.

I hope you will have the opportunity to discuss with a lot of CEOs.

And we will continue because business is in permanent evolution.

Given the fact that geopolitics is moving over time.

They're very different things. Thank you.

Thank you.