00:00Jacques Rolland is a senior research fellow at the Global Policy Institute.
00:05Lovely to have you on the programme again.
00:08Look, you know, celebratory farewell drinks were held in many cities around France following Beirut's exit.
00:13What would you say that the mood is like in France?
00:17The mood in France is, as usual, people are dissatisfied.
00:22You know, French people are very hard to satisfy, but this time with more, more than usual,
00:28because the situation has been for a long time really confusing.
00:32They don't, they have no idea where the future is.
00:35There's a great sentiment of uncertainty, and it has turned into anger.
00:39And François Beirut, only ended with 19% support, is the most unpopular prime minister in the history of the Fifth Republic.
00:48Macron is not doing much better, 23%.
00:51The only support he has is for international action, but as far as the politic policies is concerned,
00:58is people are very angry with him, and it is actually, there's a certain level of hatred towards him, quite strong.
01:06So, the budget was the last straw.
01:10The idea, the spending cut, and the idea of cancelling two days bank holidays in France was too much for the French.
01:16But that's the thing, isn't it, Jacques?
01:17This is a financial as much as a political crisis.
01:21Why is France's economy in such a state?
01:24The French economy is not that bad, in a way.
01:28The growth is all right.
01:29The thing is that our debt is increasing.
01:31Our debt was gone to 6.4% of the GDP last year.
01:37The idea of this budget is to bring down to 5.9%.
01:40But at the same time, the French debt finds buyers on the market.
01:46Well, no problem, because France is not on the verge of bankruptcy, as some people try to say.
01:53French private savings are twice the amount, 6,000 billion euros, as opposed to over 3,000 billion for the French public debt.
02:06So, they accept that the interest rates have gone up, the 10 years' interest rates, and the cost of repaying the debt or servicing the debt has increased.
02:17It's now become the highest budget.
02:20There is a high term in the budget.
02:22We spend more on repayment of the debt than we spend on education or on defense.
02:26So, that creates a problem.
02:28And the problem is not so much the risk of a financial crisis, it's the uncertainty, which leads to have a bad impact on economic activity.
02:37Firms are not investing.
02:39The future is not clear.
02:41And we see the French are worried.
02:42They don't spend.
02:43The savings ratio of the French has gone to 19.2% of their disposable income, which is an amazing rate, and which shows that the lack of confidence.
02:54Lack of confidence.
02:55So, is there any real hope that the new, the country's new, yet to be revealed, Prime Minister, will have a better chance of forcing a realistic economic plan through?
03:05Yeah, it's short-term action.
03:07The next Prime Minister's job is to get a budget for this year.
03:12That has, and to agree on a proposal by the end of October, the budget must be voted at the latest on the 31st of December.
03:19For that, he needs to get a majority, not to be censored.
03:26And that's why he was going to try to form a government, which this time will include the centrist block, which is around 240, plus the Republicans will back it.
03:40And now, he has to count on the support of the socialists.
03:43I don't think we'll have a socialist Prime Minister, as some people think.
03:47I think that maybe some socialist minister might come in, but I'm not even sure about that.
03:54The main point is to try to find a non-censorship agreement to say that for the good of the country, it's important to have a budget.
04:05And also, let's not forget that the socialists and the Republicans, the last thing they want is a dissolution and a snap election.
04:13That's what will, even though their loggerheads are their policy ideas, like they disagree totally on the issue of pensions, on the issue of taxation, on the issue of immigration.
04:25But for their old survival, a snap election would lead to a national rally victory, and that would probably fall.
04:35So, even though 60% of the French want a snap election, the leaders of the Republican Party and the Socialist Party don't want that.
04:56He's going to try to hold on, and that's why it's important for him to get this budget through and get a government which lasts at this late Christmas.
05:08Oh, we have to leave it there. I'm terribly sorry. Jacques Rillon, always a pleasure to talk to you, a senior research fellow at the Global Policy Institute.
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