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- [00:00]
A
Thank you, Minister. Ladies and gentlemen, my name is Peter Sutherland, I'm Chairman of the Board of Governors of LSE and I welcome you all to LSE today for the lecture. The event is part of LSE's European Institute, an APCO Worldwide Perspectives on Europe lecture series, and we're grateful to APCO for its continuing support. It's a particular pleasure to welcome Minister Moscovici today to lse. His schedule is tight, but hopefully we will have an opportunity to engage in discussion with him as well as listen to him in the presentation that he will make. I need hardly preface his remarks by saying that France has played the pivotal role, perhaps in the development of the European integration process, going right back to the pantheon of early heroes, Schumann and Monet and so on, right up to the present time. And most notably, in the last couple of decades, Jacques Delors influence has been enormous on where Europe has gone. And we're now at a moment of truth. It's often been said that it's a question of either integrate or disintegrate. And the challenge which is now posed by the current turmoil in debt markets goes to the very heart of some of the fundamental premises of the European integration process, and in particular the sharing of sovereignty, which is something which many of us believe very firmly in. And again, the role of France will be absolutely crucial in this. So thank you very much, Minister, for offering to be with us today and I give you the lecture.
- [01:59]
B
Mr. President, ladies and gentlemen, let me first thank Mr. Sutherlands for the welcome words he just addressed. I'm here in London today for a meeting with the Chancellor of the Exchequer, George Osborne, who is my counterpart here in France. We call that the Minister for Economy and Finance, and in the context of, I would say, kind of honeymoon between France and Great Britain. I'm not sure that this is the idea that everybody has about our, about our relationship, but still it is true, because if you consider the bilateral relationship between France and Great Britain, you've got to notice that our president, French President Hollande, who was elected four months ago, he has been in Great Britain here to visit Mr. Cameron three times. He met him twice more in Camp David and Los Cabos. Our trade relationship are strong, I would say huge. When we come to defence. Cooperation is an example. If you look at foreign affairs, well, we have common positions on almost every item. When you come to delicate matters on the planet, Syria, Afghanistan, Iran, Libya yesterday, on security or justice matters, we also cooperate very closely. And I want there to have a word for this family, British family, who was murdered in Chevalin, in France. We are trying together to see who committed that horrible crime and then to punish the people who did it. I want also to of course, congratulate Great Britain for the incredible success of the Olympics, although the British team did better than ours. But there were arguments about that that I won't bring here in this room. The discussion between the two economic and Finance Minister is not in that context. The most simple, for a clear reason, is that my country, France, belongs to the Eurozone. It's one of the most important country of the Eurozone, while Great Britain is not in the Eurozone. But we decided alongside with George Osborne, a principle that is to listen to one other interest. I don't want to bring the British government into difficulty. And they can also be very helpful for the success of reform. I would just take one example on which we discussed a few minutes ago, which is the banking union or the supervision on the banks. Strangely or paradoxically, oppositions are quite close. And so I think that in every field we must try to improve and improve and improve all the time the relationship between our two countries. We don't share all the point of views, we've got differences, but we've got to try to work together. It's a pleasure for me to be with you today here at the lic. I couldn't find a better place location to give a speech and to wrap up my short tour here in the uk. Presidente Hollande and my Prime Minister, Jean Marquero have already made a visit here in the UK to discuss what I mentioned a few minutes ago of fruitful and valuable cooperation on political and economic matters. I forgot energy too, which is a sector on which we work together very closely. And so I'm pleased to be here to make my own contribution and share with you my vision of where France and the Eurozone stand at the moment and what we think should be the path forward, both domestically and at the European level. Let me start with France. You can wonder, you can always wonder, when a new government came into office, what is the policy of the government? Where does it leave the country? As you know, a new government was formed just four months ago. When we came to power, we found a country afflicted by three interconnected illnesses. Too little growth, too much debt and no support for reforms. Government action and political leaders in general, I would call that a deficit of confidence by the people. The financial crisis and the European debt crises have hurt us hard. France's budget was clearly on an unsustainable path. Our company's competitiveness has been steadily undermined or over the past years. Our foreign trade was in and is in a bad mood not with Great Britain, but globally. And finally, the unemployment rate has edged up to over 10%. Young people in particular find it harder and harder to join the labor market in France. I don't mean to depress those among you who are are LSE students. You'll be fine in France because it's a strong country with strong assets. But when you all will become Secretaries of the treasury, you'll be confronted by the same questions that I have to pass today. What do we do to respond to the economic challenges we're facing? France's strategy was clearly articulated by President Hollande on Sunday last week. And let me give you the sum up of this. First off, never lose sight of where we want to be headed. More jobs and a sustainable financial position for the country. We are pursuing both objectives at the same time. Second, keep also in mind that we are here for five years and that our economic policy will evolve markedly over time. Our focus is the first two years and during that moment we will try to achieve two objectives. First, stick to the government's commitment to reduce the budget deficit. This is a priority for us. And second, design at the same time an ambitious policy for competitiveness to lay the foundations for turning our economy around by 2014 and fire up growth. It won't come easy. I'm quite conscious of that. There's no question about that. But once this two year period is over, the plan is to draw on good economics and financial results to move on to a more rewarding phase of expansion, redistribution and what President Hollande called a more human society. Let me focus here on our priorities for the next couple of years. Since it's the window the French government gave itself to fix the economy, France has embarked on an ambitious path to return to a balanced budget by 2017. We have a lot of efforts to make with a deficit goal of 3% GDP next year, down from projected 4.5% in 2012. And when we came into power, the Trend was over 5%. You see, that is ambitious and that it needs efforts. We are on track to reach our objective this year after Parliament passed a bill in July to make necessarily fiscal adjustments. If we hadn't made it, we would be, I repeat again, almost or over 5%. And I am with the President, with the Prime Minister, with the government finalizing Those days, the 2013 budget which will meet. I'm very firm about that. The 3% deficit target, of course you can Ask yourself, is this possible? Make no mistake, we could not be more serious about plugging the deficit. President Hollande has campaigned on a platform of fiscal responsibility, not for the sake of it. We are not in love with the figure of deficit, but because we do not want financial markets to be constantly breathing down our neck and because the French government would rather direct public funds towards public services or growth competitiveness sustaining measures then toward servicing the public debt. I'm very much aware that €1 less in order to reimburse our debt is €1 more for health, for education, for use, for competitiveness, for public services. This is why we believe, and I believe, that debt is an enemy for the economy and being myself a socialist, that it is an enemy for the left. When we are in power, we must regain sovereignty and independence with regards to markets and with regards to funding our social model and policies. That's the rationale for our determination, which is absolute, to meet deficit targets. Some of you might think that we will simply go on a tax frenzy to increase revenue to meet our objectives. I had a meeting with the press and I understood that this might be the idea of some of the journalists here in the uk. Not so. The French government will increase revenue at the beginning of its term. There's just no way around that. We need 37 billion for next year to hit our deficit target and stay on course to the balanced budget in 2017. So yes, some of the adjustment will have to come from tax rises, in particular on larger companies and wealthier households for 20 billion euros. But the Finance Act I'm Preparing also includes 10 billion euros in spending curves. More importantly, we intend to stabilize the overall tax burden by 2014, then focus on cutting spending and shifting the weight of fiscal contribution away from small businesses and from low income households, in a spirit of a value in which we believe, which is called fairness or justice. So for the next two years, restoring the health of public finances is a priority. It is clearly my priority. But there is more to our program than fiscal credibility. We will also design and implement ambitious policies to restore competitiveness. Now, how do we achieve that, may you ask? First, we want the financing needs of the French economy to be met. We want to make it easier for entrepreneurs to get funding for their projects. And we are working on three complementary initiatives to make this happen. First, regulatory and fiscal incentives will be designed to channel savings toward small and medium sized entrepreneurs. France, that's my diagnosis. And adequate levels of spending. But there is a potential of orientation towards small and medium sized entrepreneurs, which is too weak. So we'll have to have savings directed to investment. In addition, I will be setting up in the next few days President Hollande first electoral commitment, a public investment bank to help cash trapped small businesses, but also innovative companies to obtain financing. In my discussion with George Osborne, I noticed that the British government also wants to build up such business bank and we will have to exchange experiences about that. Finally, I will conduct before the end of the year a banking reform to make sure banks are focused on accompanying business development and not on making profits out of proprietary trading. So a better response to the financing needs of the French economy is the first item on our competitiveness agenda. Implementing structural reforms on the fiscal front is the second key item. A comprehensive plan will be unveiled by the government by mid October. I'm sure you will understand easily that I cannot share the details of this plan with you today. But what I can tell you is that we are going to examine the level and structure of corporate taxes. We're going to simplify business taxation. We are going also to stimulate private investments in R and D. And we will start that with the budget which will be voted in a few months from now. As part of this plan, we will also review and improve our tools to export from financing. Finally, we will come up with a blueprint to improve the quality of our regulatory framework and make government, I would say, leaner, simpler and more efficient. Last but not least, we are going to reform our labor market. I know that this is a reform expected for years and maybe decades from France. We will do it. That's what the President indicated last week. France labor market today somehow is failing both employees and employer at the same time. Neither companies nor workers are adequately protected. Today we are falling short on both fronts. So we will open negotiations with social partners with a view to quickly securing careers, paths to reducing inequalities among workers, to identify additional factors that give rise to employment disincentives. And this is what we want to achieve quickly. And when I say quickly, I mean that either unions are social partners, reach a compromise by the end of the year on labor reform, or the French government will act unilaterally by the law. My preference, of course, is that there is first an agreement, then a law, and that the law is the agreement coming into effect and taking force as a law. So let me recap. The long term aim is jobs and sound financial situation. We are hoping to reverse the relentless rise of unemployment and return our stored economy to growth in two years. 2014 again is our goal. Over this period, the emphasis will be on plugging the deficit and enhance competitiveness, in particular through labour market reforms, and by revisiting some of the funding options supporting our social protection mechanisms, because we don't want the labor factor to be too expensive in France. This is important too. So this is for France. Where does Europe fit in this picture? Well, from a French perspective, if we do this right, I truly believe that the EU could actually contribute to kickstart the stalled engine of growth in the Eurozone and beyond. Doing this right means acknowledging that growth will not come exclusively or even primarily from restoring market confidence by getting a grip on public finances, or from implementing supply side structural reforms, but also from boosting demand as well. To put it simply, my government believes that budgetary discipline needs to be balanced with growth supporting measures. And this is exactly what Mr. Hollande is pleading in Europe. How far have we come on that? I truly believe that a major step was achieved at the European Council in June 2008 and 29 in June, as you may know, President Hollande, then a candidate, campaigned in Europe for a shift in policy away from austerity and in favor of growth stimulating measures. In this respect, France is of the view that the Jew Summit successfully initiated a wider, much needed effort to strike a better balance. It's not yet a perfect balance. Between the various macroeconomic objectives member states are pursuing, it is high time for growth to reclaim its essential position on the European economic map. Assists why France welcomed what it asked, which is the European Council's agreement on the Compact for growth and job offer, 100 billion euros with new cash coming from a combination of short term growth instruments such as project bonds, not yet Euro bonds, but project bonds, reallocated structural funds and French investment capital from the European Investment bank, which plays a very important role in the present European crisis. You may easily understand now why, as Minister of Economy and Finance, I see no contradictions between our national agenda and our European reform agenda. Quite the contrary. I believe that they complement and reinforce each other, that we should build on European initiatives to obtain better macroeconomic result in France and conversely, that we should draw on our achievements in France to strengthen France's voice in the European field. And furthermore, I'm convinced that the main obstacle for growth today certainly is uncertainty in Europe. I was four days ago in Athens and I noticed while speaking with the Greek Prime Minister and ministers that they spoke about drachmophobia. As long as the people, their firms are not convinced that the Eurozone gets out of its problems, there won't be a secure and easy growth in Europe. This is why it's so important to stabilize the Eurozone and to find a definite solution to its problems. Let me be more specific. It is precisely because France has favored under President Hollande a realistic and yet ambitious budgetary path and heightened credibility for its financial policy that I believe so our European partners turn to us again, as illustrated by the satisfying, I would say, not perfect, results of the June European Council. The same logic being applied the other way. The domestic stage and the European stage should be viewed as, in my conception, two faces of the same coin. Just like we should build complementarities between the pursuit of credible fiscal adjustments measures and the pursuit of economic growth. By the same token, France believes that stabilizing the Eurozone is a prerequisite for growth in member states. Just as mentioned a few days ago, I think that today we are not out of problem. I was asked that by the press a few minutes ago. But getting closer to the light at the end of the tunnel, even if much has yet to be done, all our eyes now are on Greece at the moment, for obvious reasons. Let me put this in unambiguous terms. Greece belongs to the Eurozone. I'm deeply convinced that we have got to defend the integrity of the Eurozone, that the Grexit as called by the medias, is not a solution, that it could create an effect of contagion threatening the existence itself of the Eurozone. This doesn't mean that we must say that Greece must stay at any price. When I was in Athens, I told the government that they need to make efforts with a huge determination to meet an agreement with the Troika. But if they do, and I think we are quite close to this agreement, then we must have a definite solution for Greece in the Eurozone. And I trust the newly elected government, pro Euro, to find the strength to make those reforms. Spain has been another subject of concern. I'm also confident that under the circumstances we are on the right track, both in Madrid and in Brussels. And there I want to salute to congratulate the ECB for the important decisions announced by Mario Draghi. I don't know what will be the decision of the Spanish government, but I know that now we have all the tools necessary to intervene when a country is a victim of speculation and this is probably decisive for the future. It's a jump, a conceptual jump, which has been made by Mr. Draghi when he said that the Eurozone was irreversible and that it was a part of the mission. It is a change of the European Central bank to fight for this a fully Fledged banking union, meaning a system to wind down or recapitalize troubled banks, combined with a Europe wide bank deposit insurance scheme would go a long way towards breaking the feedback loop between weak banks and weak sovereigns. This is what we are searching for. France sees, that's what I've been discussing with George Osborne, the banking union as a key next step for Eurozone integration. And we feel strongly that it must be completed as soon as possible. The next step is to establish a single supervision for all banks. I say all banks in Europe and to do it fast before the end of year 2012. This is the mission that the heads of state and government gave us after the June European Council. I'm really advocating here to go fast. This is a key to recapitalize the weak banks. This is a key in order to get out of the problem of sovereign states. And this is why I support the Commission's plan to do that. I must also say a word on the structure of banks. I feel about banking reforms in general that they have to be done. This was also a key promise from the. In the ongoing debate on the future of banking between the Volcker Rule and the Vickers Report, the key for me is to determine what makes resolution easier and safer. Looking at examples of banking failures in recent years, I'm not convinced, but can have a talk with you about that, that the Vickers proposals would have provided a satisfactory solution in all cases. True, though having a good resolution regime in place would have been helpful. Hence our determination to move forward with resolution tools. So we must move there to the next step after supervision, which is banking resolution before fixing the Eurozone. And I come to the end of my introductory remarks is a pressing task. But our ambition should not be limited to reaching this objective. We should set our eyes on a bigger price. Getting more out of the eurozone today in French magazine Le Figaro was a terrible poll showing that 20 years after the Maastricht Treaty, if there were a vote today, 60%, 64% of the French would vote again. Which means that even in a country such as mine, a founding member of the European Union, there is growing doubt. And this question how can we deliver more? How can the Eurozone be profitable for everybody? This question must be addressed. And we will only get more out of being in the Eurozone if we adopt a comprehensive approach to the economic challenges which we are facing and are able to offer a more promising perspective to all member states. More of the same, more of the same budgetary discipline, more of the same fiscal consolidation, more of the Same social unrest. This is not going to work and it certainly does not qualify as a promising perspective. And if it is the only thing that we are proposing to our people, then the growing distance between the people of Europe and the European Union will get even more large. And this is not acceptable for somebody like me who has really Europe at heart. I want to submit to you that in the mid to longer term we must go further in shaping and empowering our currency union beyond the eurozone. The European Union. My personal conviction is that we should seek simultaneous improvements in five directions. First, stronger measures to support economic growth. I mentioned some an effective banking union. I talked about that real political and budgetary coordination among member states, enhanced fiscal coordination in the Eurozone. And la last, an ambitious social union to encourage workers mobility beyond these five priority areas. My personal belief is that we should continue to reflect collectively on improving the governance of the Eurozone. Not only should it be more effective, it should also abide by accountability standards that are more alike to those that are found at the national level. Concrete initiatives, such as the creation of a finance minister, or let's say high representative for the Eurozone, should be held accountable to European citizens, just like national governments are, would go a long way to counter the misperception that EU institutions are too remote, too byzantine for citizens to feel they have direct say in the decisions they take. And there comes the question of democracy, of European democracy, of European governments, of European institutions. My view is that at some point governments will have to find the political will and secure the democratic legitimacy to fix the Euro's design flaws through greater fiscal union. We've got to move forward. This is what my President Hollande calls integration, solidaire integration and solidarity. At the same time, if we only look at integration or political integration, just with austerity, then nothing happens. If we only look at solidarity, without fiscal discipline we cannot move ahead. But at each step we must go further into integration and further in solidarity. And in the end, why not then meet the Euro bonds? I say, at the end of the process? So this is why I'm not personally against the greater fiscal federalism. I mean eurozone specific budget and own with its own dedicated fiscal resources in order to finance a limited but common set of priority spending in the Eurozone. I'm thinking for example about unemployment insurance. And in time this budget should, as I say, allow the issuance of euro bonds, which could be the solution. I'm aware that altering the current shape and objective of the EU so fundamentally would probably not be possible within the restraints of the current legal framework entails. The crisis has pushed European governments further down the road of economic integration. I know that we can do a lot in the framework of the present treaty. It is possible to coordinate better, it is possible to move on to the banking union. But at some moment we'll have to consider a new treaty on integration. We've got to have deep reaching changes and ultimately we've got to move towards the democratic renovation of the eurozone institution. I believe this will be necessary in due time. And this is what in France we are trying to work on. Orderly thank you very much for your.
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A
Well, first of all, thank you, Minister, for that emphatic and positive view of France and Europe in the coming period. And let me thank you also for your expression of belief in European integration, which has been part of your political Persona for a long period of time. I have two preliminary remarks before opening this to debate. The first I hate making, frankly, but for those Twitter users in the audience, and I believe I sympathize with you, I believe you're one of them. The hashtag, the hashtag for today, whatever that means for today's event, is Hatch LSE Europe. That is the first point I want to make. The second point is I now want to open this for debate and discussion and I will take questions from the audience. I would ask each person, when given the microphone, to identify themselves and their affiliation, if any, and therefore to wait until a steward with the roving microphone gets to you. May I have the first question, please? This gentleman here in the front.
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B
My name is Philip Stevens from the Financial Times. The last section of your speech sounded like a sort of requiem for the French European policy over the last 50 years. The Europe des Patris, I suppose. Is France willing to give up to sufficient sovereignty to embrace the political union which at Maastricht you pushed aside? I mean, I know your own views, but do you think France is willing to, if you like, submerge its sovereignty in the integrated Europe that you imagine, particularly when that integrated Europe will be dominated by Germany?
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A
I wonder, was that a loaded question? Perhaps not, Charles. Pam.
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B
John Palmer from the Federal Trust. Minister, you made some important remarks towards the end of your speech about the necessity of shifting to a more growth oriented focus at European level. You spoke about the restructuring of funds at European level and other investment encouraging initiatives. The fear is that even taken together their impact might be marginal. Have you formed any view about what the concrete impact on GDP would be if the kind of measures that you have proposed were to be implemented?
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A
Thank you, John. Yes, this gentleman here. Wait for the microphone, if you would.
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B
Thank you. Minister, my name is Gaspar Koenig. I wonder how you would explain that France, as a member of the European Union, is promoting and even imposing internalization, liberalization measures on bailed out countries such as Greece or Portugal, pushing for a more flexible job market and for huge cuts in state spending while doing. While doing rather the contrary at home.
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A
One more question and then we'll take some answers. This gentleman towards the back.
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B
Thank you very much. Dirk Robertson. I used to be a student to the school. Now I'm a rich socialist. I don't know, is the Euro very strong link? Is the Euro doomed? And if not, is the cost of keeping it alive going to be too great for the individual members of the European Union? Right.
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A
Perhaps if I might ask it to answer those questions, Minister.
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B
Well, first on Europe des Patris. I never believe that this is the definition of the French European politics or policy. Certainly not. I've been in European affairs for quite a long time now. My first election in European Parliament was in 1994. I've been European Affairs Minister for five years during 1997 to 2002. And I had the privilege to be here in this very place, I think twice before. I've been again European Vice President of the European Parliament in 2004. And I was a member of the convention which established the constitutional treaty. I voted in favor of this treaty. I think the definition of the French policy is much more subtle and complex than Europe des patrie. We were always in favor of integration, but always also sensitive to our sovereignty. Both at the same time. Well, some rightist movements in France could say that, or even ultra right movements. But this was never the position of, I would say the mainstream parties in this country. Never. And this must not be right. Now I'm conscious that in the end of my speech, this is why I'm here for can do that in the lse. Not everywhere I express personal views which certainly are much more in favor of integration than another minister or European personality or French personality could deliver here. But you know, if I remembered what I had done before, is that because I also take experience of my own mistakes or my own beliefs which have been disappointed by some experiences. I know that the French are very attached to the sovereignty, certainly, and that it would be naive to abandon sovereignty without getting a feedback from the European Union. This is why the concept of integration solidaire is made for. I'm not a pro integration at any price. I'm not saying we must integrate without any benefit. For my country, I'm certainly not in favor of Europe would be dominated only by Germany. This is not my purpose. But I'm also convinced that if we are capable to have at each step in integration, a correspondence step in solidarity, then we can have Europe coming closer to the people again. And conversely, I'm also convinced that if we don't do that, we will have Europe more and more technocratic, more and more liberal, and more and more far away from the ordinary people. That's what I lived in the referendum in 2005. I don't want to live that again. And this is why I believe we've got to walk on the two feet of integration and solidarity in order to reach in the end a Europe which won't be only a Europe of nation states, but not the classical federal Europe. This is over. When we are 27 member states, it's impossible. But we can have a Europe with different speeds, with different circles, the political union, some reinforced cooperation. Euro is in a way reinforced cooperation. What we are going to do at some countries in order to tax the fiscal financial transaction will be reinforced cooperation. On the other hand, what we do with our British friends in defense is a kind of reinforced cooperation, maybe a multi speed Europe, but also a more integrated European. And there we will find, I think, an equilibrium between integration and solidarity. This is clearly my goal. Second, I couldn't evaluate the growth impact or the impact on GDP of the measures which I mentioned. If I speak about the 120 billion euro package, certainly the impact won't be very important, but it can give a kickstart. It is a stimulus, in my view, we must do more. Certainly it's not once for all. This is why I articulated other proposals. But I think that the main asset for growth in Europe certainly is stability. Now is the end of uncertainty in Europe. And this is why we are so pressing or urging to find a solution for Greece, for Spain, for the banking union. And it's been two and a half years of speeches, summits, meetings, always speaking of about Greece or Spain, this must be over now. And I think that if the business community and ordinary people can say, well, Europe is not a problem, this is over, but it is also an area in which we can invest, where we can innovate higher job. Our potential for growth is considerable. And this is why it's so important now to resolve these concrete problems and to do it fast. What I hope is that in the next European Council of October we will find a solution for Greece. What I hope is that before the end of this year we will have a common supervisory supervisor for the bank in Europe. What I hope is that we will make progress with the Von Rompoy report on integration, alongside with solidarity. And then from this all specific measures and stability will come a greater potential for growth. We've got still very important potential. It is limited today by our incapacity to address the crisis we're in. I'm not saying that I want Spain or Portugal or Greece to leave this or that policy. What I'm certain is that if these countries don't solve their deficit problem or their debt problem, then there will be, and they are in a situation which compromises, sorry, their own future and the future of the the Eurozone. This is how I come to supporting reforms in my country. We are not in this situation. We are a strong country. We have. That's true that we inherited of a situation which is complicated. The 600 billion deaths which were delivered during the last five years are certainly handicapped. And this is why I advocated so strongly, and I still do, for reducing the deficit in France. This is a question of credibility. This is a question of the credibility of the signature of France. And this is why I repeat here, the budget I will present alongside with the budget minister, Mr. Cavusac, who is working with me, will be at 3% and we will have our own reforms. I mentioned the security of jobs in France, the labor market reforms. We can do that. We have the privilege to do that with our own view in this country. So we must be judged on the results of what we are going to do right now. And Francois Holland gave an appointment to the French as well on employment, on deficit by the end of the year 2013, then we can have the discussion. Is Euro condemned? Is the price too high to pay? I don't believe so, but I believe that we are running after time and we've got to find the solutions which are at the same time efficient and socially acceptable. Fast.
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A
Any questions? Yes, lady, up the back.
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B
Hi, Francois. Margarita Ridaili from the bank of England. In your speech you linked a common European Supervisory framework to an effective bank resolution tool.
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A
I would like you to expand a.
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B
Little bit on this and to cover some points. First of all, why do you envisage this? Second, secondarily, what is the timeline that you would consider optimal and or feasible for implementing a resolution tool? How do you see this tool? What is the nature of this banking resolution tool EU wide worldwide? And what are the problems connected and also how advanced are discussion in France on this topic? Thank you so much.
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A
Gentleman at the back of the white shirt.
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B
Hans Kundanani. Do you think you'll get Euro bonds in your lifetime?
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A
Yes, frontier.
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B
Roger Liddell Congratulations. First of all, it's wonderful that you're leading Europe in this way. But how do you see Britain's position in a more integrated eurozone core? It seems to me that the present government in Britain is willingness into an outer tier where Britain would happily be part of a two tier Europe where we would have much less influence over what goes on. Does France see a possibility, as it were, of a closer integration with the United Kingdom outside the Euro in other areas like defense, defence policy and foreign policy? And do you think that that's a realistic alternative for the UK in the present conjuncture?
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A
Would you like to take those questions?
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B
I won't develop a lot on a resolution tool. Neither will I on the guarantee of deposits which comes afterward. What I just want to say is that alongside with banking supervision, in my view this is a whole and this might be the difference with other economic and finance ministers in Europe. Ford Gang, Shauble, the good friend of mine, and we're working every day, said well, supervision is not automatically leading to the banking union. I believe that the banking union is a global approach, that we need to have those different factors in the time to come and the faster is the better. But I'm concentrating on the first one because it is absolutely necessary. The conclusions of the European Council said that there would be a possibility to recapitalize directly the banks through the years that them if there was a banking supervision mechanism established. This is why I'm so favorable to go fast in that track, in that direction. And fast to me is to have an agreement on the basis of the proposal of the Commission before the end of this year, 2012, this year, and we'll advocate for that strongly. I think this is possible. The Commission made a huge job during this summer, seven weeks to build up a very good basis for agreement. We've got now something like three and a half months. It's feasible and it has to be done. And then we can work on the other stages of this banking union, including the resolution tool. My opinion is the faster is the better. I repeat it again, the faster is the better. We've got no time to wait to waste if we want to preserve the capacity for Europe to be again an ideal, a convincing object for the people in Europe. For Eurobonds I don't I know how much time I will live depends on other forces than mine. Although I'm a strong Atheist, So I won't mention God here, but. My hope to live politically as a minister is not next five years. That's reasonable, I would say, why not for the five years? So I think, of course I will see the Eurobonds in my lifetime, but even maybe in a shorter period of time than one expects. But it depends on our capacity to move fast in integration. Eurobonds, some of us would have liked them to come immediately. This was not possible. It was a red line for our German friends. But they can be the crown after the making of strong integration. So in a few years from now, 5, I don't know exactly 10, so I hope I will be there, maybe coming again here in the LSE for Britain's position, of course, it's a very delicate matter, you understand, that I won't articulate. Dear Roger, I remember talks that we had a few years ago in another period when Tony Blair was the pro European Prime Minister of Great Britain. It's not only because he was New Labour, he was pro European. And as you are very well placed to know, he never dared moving into the Eurozone. He didn't make the choice even to provoke the debate in front of the British citizens. I don't blame him for that because this was certainly not easy, but he was the man who could have done it. And so now we're another period more difficult for Europe with other governing figures here in Great Britain. I'm not judging them, they are my counterparts and I want with the government to have a better and better relationship with this country, whoever runs the country. That's a clear view. And this is why I went for this meeting with George Osborne. But still, maybe a few ideas. First, Great Britain is not and cannot be indifferent to what happens in the the Eurozone, because first, the decisions that we have to make. Let's take one. The banking supervision requires unanimity not among the 17 members of the eurozone, but among the 27 members of the European Union. So Great Britain has its worst to say, and even more if France and Great Britain could articulate a common position on that point, Great Britain being what it is, a very strong financial place, it would be of great help in order to make progresses in the banking supervision. On the contrary, on the reverse, on the other side, we must also pay attention to the British interests. So even if we are in the Eurozone and they are not, we've got to discuss those matters. And that's what I did with the Chancellor a few minutes ago with differences, differences which come from our different positions. Differences which come from our different views, but also with points of convergence. So this is my first remark. Not being in the Eurozone doesn't mean that you are indifferent to the Eurozone and doesn't mean that the Eurozone countries must not pay attention to what the Great Britain interests are. So we need to work together. We are part of the same council, the coffin Council. On the other points, of course we do a lot with Great Britain. In the informal summit in Nicozi, we were at the dinner at the same table with George Osborne, with Volga, Charlotte and myself, and there were other ministers and they said they watched us. And when the point came of the euro, of course everybody turns attention to France and Germany together. That's normal. We are two countries, founding fathers of Europe. We are the strongest economic countries in the Eurozone and we, we are so deeply linked together. But when you come to speak about foreign affairs, then you move the attention towards France and Great Britain together. This means that of course we can integrate more and more on those fields. When we discuss in the Security Council among permanent member states of Syria, Afghanistan, Afghanistan, Iran, our two diplomacies are deeply involved and I believe too that the progress is made on defense since a long time Samalo with Josephine Blair, but more recently with the Lancaster House agreements lead to deeper and deeper integration. So maybe we can move to these dimensions coming into structural effects in the years to come.
- [58:07]
A
I take two more questions and I'm afraid that will bring us to a conclusion. This gentleman here, please.
- [58:21]
B
Hello. Arthur Gallier, former LSE student. So, just to make clear from a previous question, do you consider France can afford labor market inflexibility and public expenditure worth 56% of the GDP? And the second point, in a now very famous speech in January by Franco Hollande, he declared to be the enemy of finance and that he said he would separate casino banking from socially useful banks. And after what seems to have been a very short lived lobbying session after his election, he backtracked. Does that mean that Francois Hollande is now the best friend of bankers?
- [58:59]
A
This lady here.
- [59:04]
B
Thank you. I'm Lucy Thomas from Business for New Europe. You said at some point a treaty was going to be necessary. New one. I just wondered if you had a sense of when, roughly. And then if that sort of opens a whole can of worms, as the right wing here would like it to. And Britain comes along with a shopping list saying if Britain comes along with a shopping list saying we want to repatriate this, that and the other you just said even if they're not a Eurozone member. You have to listen to them. How much do you think Britain would be listened to were they to say we want to repatriate a lot of things and potentially we want a referendum? I mean, will that set the cat amongst the pigeons?
- [59:39]
A
Two particularly simple questions.
- [59:44]
B
The first one is simple, very simple. I'll say it in. In my words, maybe not exactly yours. I don't know why, but I guess so. It's strange that my ears are somewhat. Seems familiar to me. But first, I truly believe that we can afford to live with our social model. Yes, we can. Certainly we do. And this social model must not be dismantled, it must not be broken, it must be modernized, must be reformed, must be changed, must be improved. But we are not there to break the French social model. And if you look at the figures which were articulated by Franc Holland, he said in his campaign that the part of public expenses GP is now 66%. We've moved down to 53%. You must remember that it was 53% in 2007. I take this data fully by hazard. It was 66. It will be 63 after the end of our mandate. This is reasonable. It's a good reason to progress with. About the enemy of finance certainly did not renounce to his conviction. And I can tell you here that the very words he pronounced saying that he wanted to distinguish casino banking from economic and socially profitable financing. This is what we are going to do. There will be a reform in the banking system in France. And this reform, I'm in charge of leading it. By the end of this year, before the end of 2012, there will be a strong, deep reform in the financing system, in the banking system in France, in order to forbid some excesses in speculation. I'm of course discussing with the banks. I don't want the French banking system to be destroyed or to be weakened. But nobody must doubt that it's still our will and our political commitment. So I wouldn't say I'm not the enemy of bankers. I'm not sure that they consider being their best friends. What I simply hope that they. They believe that I'm the economic and finance minister leading reform in order to have a financing system which is more dedicated to economy than to speculation. That's what I'm going to do under the conduct of the President of the Republic, in direct line with his campaign. I'd be very careful about your other question. I'm sorry to say so, but I wouldn't say Great Britain is an island, but it certainly is a sovereign country. And so I won't reflect on that a lot. So a new treaty at some point. Well, what I wanted to say that we need to be in three terms. Approach. First, the short term approach. In the. In the months to come, we must be capable of solving the Greek problem of getting rid of the interregnition on Spain and advancing into the supervision mechanism, direct recap. And bringing all together the tools necessary to fight against speculation in Europe. It means stabilization. So that's what I'm planning to work on. It's absolutely necessary and we are planning to work on. Then comes the, I would say, midterm reforms that can be done under the treaty. If we want to coordinate better between our governments, we can do that easily. If we want to create a budget which is more active, dedicated to modernization, we can do it. This is one question which will be raised when we talk about the financial perspectives of the European Union in the year to come. But after that, we need also to think about the long term. And the long term, to me is more integration. And I believe that at one step, few years from now, I would say during the five years to come, will have to think about the possibility. It's not a certainty to have a new treaty. And I believe that this might be upon the conclusions of the von Rompuy report, which will be delivered in a few months from now, which is not only the von Rompuy report, but a report by the four presidents of the European institutions. So let's move on quickly, strongly, with a very strong will too, reasonably. And in the end, we'll reach integration and the Euro bonds during my lifetime.
- [65:16]
A
Minister, let me bring this meeting to a conclusion by saying a couple of things. First of all, I would ask everybody to remain in their seats until the Minister has left the room. Secondly, I would like on behalf of lse, to pay particular tribute to the fact that the Minister's father, Serge Muscovici, is an esteemed academic and an honorary graduate of the school. So having you back in it is a particular. Is a particular. Is a particular pleasure. With regard to what you have said, I won't attempt to summarize it. I would say simply say that your message about more integration, your message about the need to balance the fiscal side with the concept of solidarity, something that has been notably absent in much of the debate about where we're going, and your view about the need to increase the democratic belief in the European integration process, in which you believe. Which I believe is something which is very welcome to many of us here today. We're very grateful to you for being with us. We're very grateful to you for what you've said and for the positive and constructive message that you have given as a result of what you have said. And finally, let me say that there's an old tradition, at least going back to the occasion when Mandela was here, of passing. I don't like doing this, really, but passing this cap to you as a memento of this occasion. And let me do so.
- [67:02]
B
If Mandela did it, I can make it, too, Certainly.
- [67:07]
A
Together with the certificate to your attendance. Thank you very much indeed. Thank you.