French contagion fears rise, as Le Pen outlines economic vision

If you listen to Min Le Pen, who is speaking now in French, and I won't bother translating for you. Not many of you can speak French as well as I can. I just um but but seriously, listen to what she's saying. We want to budget a primary surplus budget by 2028. Makes sense. You know, you raise more in taxes than you spend. That's X interest payments, by the way. But we want a budget primary surplus by 2028. That makes sense. Uh want a golden rule proposal to be decided by referendum. uh wants €140 billion euros in savings in 2032 compared with 2026. Wants to bring down the France public deficit to 3% in 2030. Says France could lose its financial freedom if it doesn't make the right choices. There is nothing that she said there that's particularly contentious. I mean the golden rule maybe, but the fact of the matter is how do you do it? I I I I I there's lots of things I want. I want West Ham to win the Champions League in Europe. It ain't going to happen in my lifetime. So, how you going to do it, Madame Le Pen? That that that's what I think we need to know. And I don't see the recipe. Do you, Karen? >> 140 billion euros in savings in 2032 compared to 2026. I mean, that's quite a big number that they tallied up, but again, it's right out in the long grass. 2032 is a long way away. I mean, what we need to talk about is more immediate measures. And if you think about where the budget deficit has been at for the last number of years, 2023 to recently, five odd% it's been stuck at that level. So getting the deficit down to the 3% mark by the end of uh this decade is a heroic challenge. >> Can I tell you why I look it's been a bug bear for me for 16 years. This I viewers in this hour apologies if you heard this early in the show. I I I did a world tour well not world tour. I did a European tour starting in Rekovic and moving all the way around to Ireland to Dublin to Madrid to um Nicicoia. You name it, I was there during the European sovereign debt crisis 2010 to 2012. Everywhere I was on the road every week almost and I could never work out why I never went to Paris. I couldn't work out why I was in Milan, why I was in Rome, why I was in Rekovic, while I was in in Dublin, all these places. I got that Lisbon. I I got that because they had a debt crisis. They had I won't use the acronym that dreadful acronym beginning with a P because I think it's very derogatory. Why wasn't I in France at the same time that I was in Madrid and in 2011 they had a debt to GDP of 69%. Why wasn't I in Paris when they had a debt to GDP of 88%. It's because policy leaders at the time, many of them refused to appreciate that France was part of the problem. That actually it wasn't core, it was just as peripheral in terms of the problem. It wasn't just these non-core countries that France was part of it. And because France never addressed the major problems then the IMF didn't, the EU didn't, ECB didn't. Now it's coming back to bite us in some scale. >> Yeah, indeed. I think the message coming through from Le Pen is very interesting today because she is talking about very strong fiscal measures. But don't forget she thwarted some of the budget progress last time. So the measures that Lau is putting up, would she support them in their entirety at this stage? Would she because they are tough bud budget measures that he's put forward whether they go go tough enough we could have an argument about that but would she be supportive of this budget to get some progress without bringing down the government ahead of the presidential election next year I mean that is the question as we listen to this commentary today will she support the budget >> and all of this in the face of strong public sentiment against um sort of cutbacks we've got uh even today uh there are concerns about the further protests by uh school children today joined uh by some of the country's trade unions very specifically about the situation regarding uh the funding uh of schools. How uh how does the government then go ahead or a wannabe government prospective government um presidential candidate go ahead in the face of public opposition to it? It's a it's a very uh it's a very tricky pitch to put to the voters. I mean, it would be extraordinary to be elected on this proposal because people, yes, they might feel the effects of the high borrowing costs and the uh the punishing of the the the deficit being run at at the levels it is, but they don't necessarily want to see spending cut back. You know, it's not it's not a vote. So, so the interesting part I think because you're talking about the politics of the day and what is passable and you know the the es and flows of of populism effectively what was put through in this proposal from Le Pen today is a referendum on the golden rule. So effectively this is a binding constraint on deficits and also debt putting that into the constitution that would steer in my view France a little bit closer towards Germany where you've got a debt break you have constraints in the constitution about overall spending levels. So given where the politics sit today and the lack of ability in France to get anything done, would this be a useful development for France and would it make a difference in terms of OAT and perception in the market? But then I imagine the argument in in any sort of campaign if it were to go to a referendum of sorts would be become quite reductive and you'd have those um who are trying to oppose it saying look do you really want to vote for less funding of your public services for cut backs on this that and the other and then you lose the nuance of actually these are tough decisions that need to be tackled in some way and it becomes a very sort of reductive baseline argument. I hear you. But you know, Steve wants 60% debt to GDP. This is the part there. >> I want a trajectory. I want a trajectory. I want I want serious politicians and serious opposition. >> This is the trajectory. You cut what.5% of uh GD off GDP per year. It gets you back to the 60% rather than the plan they're talking about. >> Yeah. That that Yeah. But that's the goal. That's not how we're going to get there. >> Yeah. And that's the same with and and with respect to again with respect to Madame Le Pen, with respect to Kimmy Badnuk, really easy for opposition politicians to say what we're going to do without having to make the hard decisions.