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CNBC Transcript: Interview with French Economy Minister, Emmanuel Macron


Following are excerpts from the transcript of a CNBC interview in Davos by Geoff Cutmore and Steve Sedgwick with French Economy Minister, Emmanuel Macron.

GC: We were just having a chat with Monsieur Macron, who has joined us on set and brought a camera crew with him, as well. I don't know, are these-, are they with you?

SS: You should have seen it inside, they're walking through about five abreast.

EM: They are-, I mean, they are supposed to follow me, that's the French TV.

GC: Ah, it's French TV. Ah, okay, bonjour, nice to see you. That's so crass, isn't it?

SS: Your French is so good, Geoffrey.

GC: Oh, I know. France will maintain its state of emergency, then. Let's just fill in a bit of the background here. France will maintain its state of emergency until ISIS is defeated, the country's Prime Minister has said, while speaking here in Davos. This after France announced on Monday an economic state of emergency, that was President Hollande's comment as he launched a 2 billion Euro job creation plan in a bid to tackle France's high unemployment rate and potentially boost his re-election chances. There is an election, what, in 12 months' time?

SS: Yes. Let's speak to Emmanuel Macron about this, and about the broader French situation. Emmanuel, very nice to see you. Is France moving fast enough? I know your own approval ratings in the renewal approval ratings are actually very strong, but is the government moving quickly enough, is Monsieur Hollande moving quickly enough?

EM: Look, the President announced at the beginning of this week, I mean, the series of measures you mentioned, but a lot of stricter measures for labour markets. What we need is much more flexibility for the labour markets. Why? Because the rigidity is killing opportunities for new jobs, and we will take a series of measures in the coming weeks. First, to increase flexibility at the corporate level on labour market, to facilitate entrepreneurship, jobs and corporate creation for people, and that's critical because you have a lot of barriers in a series of sectors. So we will implement that. My view is that these measures are absolutely critical for the coming months, and we have to keep pushing and accelerating these reforms, because as you mentioned, very fairly, we have 10% unemployment rate, it's too high. That's a result of, I mean, past decades and the fact that we didn't sufficiently reform the country, where Germany or the UK reformed much more drastically, sometimes ten years ago, their own economy. So the critical point in France today, and we passed a series of measures during the last 18 months, is to decrease the cost of failure, is to increase the flexibility of the labour market and to decrease the cost of low-qualified people. Those are the critical points.

SS: But that's very tough on the closed professions, it's very tough on the public sector, very often, as well, and with a presidential election on the near term agenda, is it possible that the country can't go quickly enough? I mean, Fitch, for instance, says the government measures to reduce employment do not change the overall assessment that the country has inflexible labour market and economy, as well. Can France move quickly enough, given the political agenda?

EM: Look, I think that we have to deliver. The main way to deal with a political agenda is to deliver and get results, and the President decided to basically go to campaign on the basis of these results on unemployment, so I think there is no choice. That's my strong view, we have to deliver and we have to accelerate. I know there is doubt, because a presidential election is always, a sort of, an overhang on your ability to act, but now, he announced the beginning of this week these new measures, and we will keep pushing and keep reforming in the coming months. Much more than that, I do believe that part of the presidential campaign, and the next general election, should take into consideration the system to reset the model, and what you say about civil service and the place of the public sector are critical points to be debated in part of the presidential election, precisely to have bold and ambitious reforms at the beginning of the next mandate.

GC: We have heard a lot from Mario Draghi over the last 24 hours, and he's just been speaking here, and he's in a very difficult position because he is trying to give European governments the opportunity to manoeuvre with these reforms with very low interest rates, but the markets are starting to lose patience here, and we're seven years on from the financial crisis. From a French perspective, what more do you think Mario Draghi could be doing to help you, or are you satisfied that the European institutions are doing their job correctly?

EM: I have to say, Mario Draghi did his best, and we had a lot of chance to have such an ambitious ECB President and Governor. I think now the critical point is to have governments reforming and to have investment to be announced. That's the European model we need. France has to accelerate in terms of reform. A few countries have to accelerate in terms of reform, Italy, as well, and some others, and at the same time, some of the countries which are in a situation to invest more, like Germany, should invest to trigger something new, to create the demand stimulus that we need, and at the European level we need much more integration and much more investment. That's critical.

GC: So let me ask you, if that is the case, why does the French government continue to pursue a statist approach to capitalism? You only have to look at the Nissan experience recently and the concerns that yet again the French government will buy into the business to control outcomes in factories and with employment?

EM: It's not a statist approach, it's just not a naïve approach, on Nissan or no. It's not about Nissan, it's about Renault. The government is a long term shareholder of Renault, okay? We've been shareholder for 70 years, and we have long term rights. The company just wanted, basically, to limit these rights. So as a normal shareholder, we intervened to protect them and get these voting rights. We found an agreement, but it's just not to be naïve. I mean, in the US, sometimes you buy a share, you have five to ten voting rights. I'm very surprised to see that-, because it's France you are shocked by the fact that as a long term shareholder I want to protect my citizens' money and I ask for these voting rights, which is absolutely normal. So we had this debate following market rules, nothing to do with a statist approach, but it was the best way to protect our view as a long term shareholder and basically as the reference shareholder of this company. We did it without any conflict, with the same manager endorsing the strategy, but to protect our view as a long term shareholder.

SS: Emmanuel, I want to talk about a different issue, and this is the immigration crisis in Europe and what it's doing for different countries. In a country like Germany that has such low unemployment, there is a very strong argument for employing a young workforce into the country. In a country like France, and elsewhere in Europe, where you have double the unemployment rate of Germany, there are a lot more issues, plus of course, as we've seen recently, there are real concerns about multiculturalism and the integration of other countries' peoples, and from the Muslim world, into France and into broader Europe, as well. How much is that a problem for you, as the Economy Minister of France?

EM: Look, I think the refugee crisis, because it's not just about migration, it's a refugee crisis, which is very different. The refugee crisis is a challenge for the whole of Europe, and Europe, it's a very fair point to say it's not just a security issue. It's also an economic issue. It's about our ability precisely to integrate a people and offer jobs, and that for me is one of the key rationales of the reforms I'm pushing, and I'm a strong believer in that when you lift barriers, when you deregulate a lot of stuff, basically you improve the equality of opportunities. You provide more chance for outsiders. In my country, the system isn't fair vis-à-vis young and qualified people, and these refugees are part of the scheme. So lifting barriers, providing more flexibility, more opportunities to create your jobs, to become a driver, to become a craftsman, so on, is absolutely critical. First for our young people, but as well to be in a situation to integrate, basically, these refugees. And the German model, I mean, Germany is today overwhelmed by the arrival of these refugees because of the 1 million figures, well, beyond 1 million now, but they have this ability to integrate a lot of people due to the fact that the apprenticeship is very strong there, and they have a very low rate of unemployment, you're right, so it's absolutely critical, and my point regarding the refugee crisis and the terrorist crisis is that for sure, that's a security issue, but it's also about the economy and we don't have to forget that.

GC: Sir, the British have sought special status for their banking industry ever since the financial crisis, and they've resisted attempts from Brussels to levy additional taxes on transactions and to impose ring-fencing and so on and so forth. Now we have David Cameron and George Osborne making special pleading dispensations from other European laws, 'Otherwise we're going to leave.' Do you think they should just stop whinging about their lot and get on with it? What is your perspective on Brexit and whether the UK should be a part of that?

EM: I mean, first of all, if you want to be fair, regarding financial services and especially the banking system, if you look at Vickers' rule and the reaction of UK banks, they took a series of measures. Their own, but very tough. I mean, regarding the Brexit and the relationship vis-à-vis the rest of Europe, first of all, I think that the place of the UK is in the EU. That's important for the EU, that's important for the UK, and I think a Brexit would be a lose-lose approach. First point. The second one is what should we negotiate and compromise in order to get, I mean, a positive vote? I think more competitiveness, more speed, more simplicity and pragmatism, we're fine with that. We're totally aligned. It's how to make the European Union much closer to the citizens and much more efficient. As for the opt out option, and the relationship between the in and out counties of the Eurozone and the EU, I think we have to be very careful. Because we mustn't stop the ability of the EU and especially the Eurozone to be more integrated and to progress. So that's a balance to be found, and I hope that in February during the Council, the leaders will find a settlement. I think that the President Hollande expressed himself yesterday about that, President Juncker, and a series of leaders, and they are optimistic. There is a strong willingness to find an agreement in order to help, basically, the UK leaders to convince their people to stay in Europe, because I do believe that Europe is a good thing for the UK, and the UK is a good thing for Europe.

GC: Thank you so much for joining us here at our CNBC position. It's been a real pleasure catching up with you.

EM: Thank you. Thanks very much.