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00:43:12 - Isabelle Mateos y Lago
Hello Jean Lemierre, thank you for being with us to conclude this Economic Research conference.
00:43:26 - Isabelle Mateos y Lago
After hearing a very comprehensive overview provided by our colleagues, we'll try and take a step back with you. Starting with a look back at 2025, which signifies the end of the first quarter of the century.
00:43:40 - Isabelle Mateos y Lago
In many ways, it appears to me that
00:43:43 - Isabelle Mateos y Lago
there will be a distinct before and after, although I understand you may have a slightly different viewpoint. However, from my perspective, there are at least four critical dimensions where we are now on new grounds. In terms of the international economic order, we once believed there were established rules governing trade. It now seems that such rules are no longer in place. In terms of geopolitics, we previously had a fairly clear understanding of our allies and adversaries. Once again, the situation has become more complex. Concerning artificial intelligence, it has existed since the 1950s and Chat GPT has been around for three years, but I believe this year marks a significant moment when artificial intelligence has truly integrated into our professional and personal lives.
00:44:24 - Isabelle Mateos y Lago
Lastly, the topic of stablecoins, which, with the "Genius Act", are transitioning from a shadowy area of finance to potentially a more central role.
00:44:34 - Isabelle Mateos y Lago
So there you have it, to kick off this question about what to remember from 2025. But let us know what you think.
00:44:40 - Jean Lemierre
Hello there.
00:44:43 - Jean Lemierre
You have presented a rather extensive overview of 2025. In my view, the primary aspect I would highlight regarding 2025 pertains to the decisions taken within American politics. US policy decisions are structural. For me, there are two significant areas: trade policy and deregulation, which notably impacts our banking sector. Let us briefly examine tariff policies. Tariff policies encompass two key elements. Firstly, they express a commitment to reindustrialising the United States. This relates to trade. Indeed, it disrupts conventional practices and alters our discussions. But fundamentally, it conveys a crucial message: the United States has relinquished too much of its industrial capacity. While it has enjoyed low prices and high-quality goods, there is a desire to reindustrialise. The implications of this can be debated, yet I contend that the initial message is profoundly significant. Therefore, I would like to make two observations. The first is, this is not new. Mr Biden articulated a similar sentiment with the IRA; although he did not impose tariffs, he did provide subsidies. I am not sure that his predecessors, in particular Mr Obama, did not express similar views regarding the pivot to Asia, which is not a recent development, particularly concerning China and its leadership.
00:46:20 - Jean Lemierre
So, the reindustrialisation of the United States is being asserted in the spring of 2025 in a strong, significant way. We’ll see if this happens, but in any case, it stands as a fundamental aspect of US policy. The second is deregulation. Deregulation can be viewed as a continuation of the events of 2008. In 2008, there was considerable apprehension, leading to extensive protective measures and the establishment of stringent regulations; but then suddenly, the US acknowledged the need to reverse some of that. That summarises my perspective for 2025. These represent two significantly structural trends, far more substantial than commonly perceived, as I previously mentioned regarding tariff policy. These are enduring and deep-seated trends. Concerning industrial policy, it is important to note that China has been implementing an industrial policy since the era of Deng Xiaoping. China's focus is not on consumption but rather on industrial policy. Europe is the only one that thinks differently today. Indeed. This presents a serious challenge for Europe. What actions should Europe undertake in a landscape characterised by North American reindustrialisation and Chinese industrialisation, particularly in the realm of artificial intelligence, as you pointed out? Similarly, with respect to deregulation, Europe is a continent that knows how to regulate, which knows how to implement it, which has done so extensively across various sectors, and is currently facing a notable transatlantic divide. Therefore, for me, 2025 encapsulates the essence of reindustrialisation, deregulation and a critical examination of the European system. The European system has recognised these dynamics, as evidenced by the Draghi report and the Letta report. The European system has responded, European brains have kicked into gear, and we will await developments in 2026 to determine whether the brains have successfully addressed these challenges.
00:48:14 - Isabelle Mateos y Lago
Very well, but actually, European brains, specifically referencing Draghi and Letta, kicked off already in 2024.
00:48:20 - Isabelle Mateos y Lago
So, in a sense, they saw the US turning point coming. In 2025, there was considerable discussion emanating from Europe, proclaiming, "Ah yes, Draghi’s report, it’s great, we’re moving forward."
00:48:33 - Isabelle Mateos y Lago
Moreover, there are numerous projects currently in progress, both regarding industrial policy and administrative simplification, per the terminology employed. However, can we trust that Europe has genuinely woken up, that it has grasped the message, and that this newly initiated effort will persist and yield results, or are you still skeptical?
00:48:58 - Jean Lemierre
Well, first of all, we said it.
00:49:00 - Jean Lemierre
We said it in spring 2025.
00:49:02 - Jean Lemierre
Not only did we say it, but investors did too. It was a sort of awakening for Europe, Europe's moment.
00:49:10 - Jean Lemierre
However, it has somewhat diminished. What we referred to as Europe's moment still exists, albeit in a less vigorous form. Perhaps, in order to answer your question, we need to mention another critical issue for Europe, which is war, specifically the threat it poses. For 20 years, Europe has been under a genuine threat, that of terrorism. Terrorism has presented numerous challenges and, regrettably, inflicted suffering on European soil, alongside significant commitments beyond European borders. Today, Europe faces a threat at its borders, particularly concerning Ukraine and Europe. We are aware of the terrible suffering in the Middle East, in Gaza. These are all issues that have suddenly become central to European concerns, leading to questions about the nature of defence, solidarity, support, military capabilities, equipment and industry. And we can see how these issues have been taken into account, by Germany in particular. Consequently, there are three or four major European challenges that Europe is endeavouring to tackle. As to the responses,. first of all, I would be positive. There are components of a response. We can see that. In my view, the most significant component of the response is Germany. Germany, demonstrating considerable budgetary ingenuity and political boldness, is contravening several German regulations and adhering to the recommendations of the International Monetary Fund and the OECD, which have been urging it for 20 years to allocate funds, incur a modest amount of debt and invest as necessary. Afterwards, we can have a debate about how to do it and how long it will take, but in any case, the decision has been made in 2025 and that is quite remarkable. The European Commission has launched a number of initiatives on the Capital Markets Union and industrialisation. But fundamentally, Europe has not yet delivered what it should be doing. And there are reasons for that. The first reason is that Europe still sees itself as an open market, where the focus is on ensuring compliance with the principles of a transparent and competitive market. That's all well and good, I agree, except that we are probably the only ones. With US reindustrialisation and the continued industrialisation of China, Europe is confronted with this challenge. Basically, what should be done? Should we continue to manage these rules, or should we introduce not protectionism, but – and I will come back to this – safeguard clauses? In the face of significant pressure, should we not just negotiate, protect, renegotiate, and strive for agreements? That is what Europe must do, and it knows how to do it relatively well; there is no difficulty there. But for the moment, Europe is still finding its feet on these issues.
00:52:31 - Jean Lemierre
Why?
00:52:31 - Jean Lemierre
Essentially, there is a relatively straightforward debate. When discussing remanufacturing, we refer to both consumers and producers. Both China and the United States have now prioritised producers over consumers. This remains a contentious issue. We can clearly see what is happening in the United States and the political risks of putting consumers too far to one side. Europe has chosen consumers. There is an ongoing debate in Europe regarding striking the right balance between supporting consumers, which is justified, and simultaneously helping producers. Numerous demands, ideas and opinions have been voiced. The new balance has not yet been achieved. So I hope it will happen fairly quickly. Regarding the Capital Markets Union, we find ourselves in a similar predicament; discussions have been ongoing for 10 years.
00:53:22 - Jean Lemierre
Europe is a prosperous continent,
00:53:24 - Jean Lemierre
where we have considerable long-term savings.
00:53:26 - Jean Lemierre
It is difficult to mobilise European long-term savings for Europe’s long-term needs.
00:53:31 - Jean Lemierre
Europe has substantial long-term needs in research and corporate equity funds. We encounter considerable difficulties in raising equity in the American sense, especially for technological innovation. And then we have a defence initiative to pursue.
00:53:49 - Jean Lemierre
There are many demands.
00:53:50 - Jean Lemierre
So I’m fairly confident. I believe that 2026 will be a year of significant accomplishments.
00:53:57 - Jean Lemierre
Europe is a democracy.
00:53:58 - Jean Lemierre
It is essential for the Member States, the Commission, and the European Parliament to reach a consensus. We need to move forward step by step. I am fairly confident that we can achieve this. Honestly, the challenges confronting Europe are immense. The external pressures on Europe are very strong. If we aim to maintain our European social model, which is our collective aspiration, and fund our social protection in an ageing continent, we must take decisive action. We must act.
00:54:33 - Jean Lemierre
We have the means to do so.
00:54:34 - Isabelle Mateos y Lago
Perhaps this is where there is a little less opposition between the consumer dimension and the producer dimension, since ultimately, consumers also want to keep their social protection model.
00:54:44 - Jean Lemierre
This is where, typically, we should be able to reconcile things.
00:54:49 - Isabelle Mateos y Lago
You mentioned China. This year, China has faced the near closure, or at least the obstruction, of the US market, which has redirected its focus to other markets, especially Europe, which now has a significant trade deficit with China. You are departing tomorrow as part of the French President's delegation. In your opinion, what message should Europe convey to China?
00:55:18 - Jean Lemierre
One of partnership. This partnership was established long ago, initiated by Deng Xiaoping, who opened up China and began to build a partnership with Western capital, technology, expertise and markets. However, this partnership must not remain static. It is evolving. Today’s China is not Deng Xiaoping’s China. In a few years, China is projected to represent approximately 50% of global industrial capacity. This is a crucial factor to consider. The level of innovation is significant. Progress in artificial intelligence is notable. One of China’s major strengths is its ability to leverage artificial intelligence in manufacturing. These are formidable competitive elements. At the same time, China needs to move forward. So, we can see that there is a balance between complete openness and the risk of being overwhelmed by industrial production, and complete closure, which risks creating significant conflicts, losing opportunities and generating unemployment. This is in no one's interest. So we need to rethink this balance. If we set aside the issue of leadership,---Europe does not qualify as a continent of leadership. The United States is engaged in a struggle for leadership, aspiring to keep the lead. In contrast, Europe lacks this ambition, or at least it seems to have moved past it. After numerous attempts, it has come to realise that pursuing political leadership may not be the most suitable direction for Europe. The world frequently reminds Europe of this fact, and rightly so. However, Europe remains a wealthy continent, characterised by substantial savings, a wealth of talent, and a readiness to collaborate.
00:57:16 - Jean Lemierre
So we need to find a balance. This, in my view, represents the challenge at hand.
00:57:20 - Jean Lemierre
In essence, the trade balance is made up of export volumes, tariffs, quotas, investment volumes and partnerships. There are two quite evident areas to consider. Opening the market... Why not? And technology is necessary. Therefore, it is clear that there are several strong components at play. I firmly believe that, regardless of differing opinions, this partnership serves our interests. Europe stands to gain from technology and expertise. Conversely, China benefits from having a viable market. In a global landscape where trade and investment are not only centered in Europe but also in Southeast Asia, a significant destination for Chinese exports, we can identify potential for balance. Unfortunately, achieving this rebalancing requires time and may involve challenging phases, as evidenced by unexpected developments, such as cognac being caught in a dispute over electric vehicles. Nevertheless, this is the essence of repositioning, and I hope that the European Commission, heads of state in Europe, and European enterprises – at least that is the message I intend to convey to French companies – will engage in this rebalancing effort.
00:58:44 - Isabelle Mateos y Lago
This rebalancing bears some resemblance to the terminology employed by President Trump when he initiated his significant trade offensive at the start of the year. In your opinion, could this result in a phase of tension and discord between the European Union and China? Or do you think that, in the end, both sides will be clever enough to maintain a relatively harmonious relationship?
00:59:10 - Jean Lemierre
Let us prioritise cleverness. If we prioritise cleverness, we should typically observe fairly rapid developments... Perhaps there is an underlying challenge in your question, indicating a European difficulty. Europe consists of 27 states, and we do not necessarily share the same interpretations or interests; this is not solely a Chinese matter, but rather a European concern. To achieve a favourable outcome, as the Chinese say, we require harmony over time. Once again, there are ample reasons for such harmony to exist, enabling us Europeans to remain consistent and united. Here too, intelligence must prevail.
00:59:55 - Isabelle Mateos y Lago
Very well. And perhaps to conclude on a note that I hope will be optimistic. Ukraine, you were there not so long ago. This is crucial for us, for the BNPPP group, for everyone, for Europe, a significant issue. In the last few days, it seems that things are moving in a slightly less, slightly more promising direction, shall we say, than in previous weeks and months. How do you see the situation evolving and what opportunities do you see for Europe as we hopefully move closer to an end to this conflict?
01:00:36 - Jean Lemierre
First and foremost, Ukraine. The situation in Ukraine is a tragedy. And, how can I put it, the fight for Ukraine is a fight for Europe. The reason for mobilising in support of Ukraine is Europe. Of course, it's for the Ukrainians, we agree, but it's also for Europe. And this is an extraordinarily important European issue. I do not see any distinction between the interests of Ukraine and those of Europe regarding peace. My second observation is that peace, as you noted, along with reconstruction... the political, economic, and financial rebuilding of Ukraine requires a stable, enduring peace, which is challenging. The history of Europe is full of such debates. It is a debate that Europe has had to face several times in its recent history. So we understand... And I believe that Europeans possess insights and, regrettably, experiences to impart. And there can be no reconstruction without the prospect of lasting peace. Unfortunately, we are all too aware of this. And we need, Ukraine needs to rebuild itself, it needs to rebuild its infrastructure, its electricity system, its water supply system, its transport system, and then to develop economic activity. It has the resources to achieve this. It has a population of remarkable resilience, which is extraordinarily strong, imaginative, creative, and rich in technological capabilities. So Ukraine knows how to do this. We know how to support it. However, the framework must be one of stability and peace, not uncertainty and potential conflict. That is an easy wish to express. I know how difficult it is to implement, how much tension and how many issues lie behind all this. But for the European continent, for all of us, it is absolutely vital.
01:02:52 - Isabelle Mateos y Lago
Very well.
01:02:54 - Isabelle Mateos y Lago
Thank you very much for sharing these insights and concluding with the term resilience, a concept that I believe has truly become the hallmark of the system.
01:03:03 - Jean Lemierre
If you will allow me, I would like to make a comment, as you referred to it. I recently visited Ukraine. I would describe the resilience I observed as rooted in an extraordinary sense of loyalty among the Ukrainian people. Whether among those on the frontlines or behind them, those who work, and those who endure hardship, there is a deep internal loyalty within society, and remarkable vitality. I think that more than resilience, the Ukrainian message is vitality.
01:03:40 - Isabelle Mateos y Lago
Very well. Let us conclude at this point.
01:03:43 - Isabelle Mateos y Lago
Thank you for joining us.
