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00:00What do you think Nicholas. About the damage being done to the French economy has it. Is it is it significant yet . No I don't think the damage from those demonstrations is significant at this point. I should say that I was advised her to as a minister 20 years ago. So this is not very recent. But I keep an eye on this. I think what's happening is that McCall wants a French governor and talk going for a big reform very structural. It's really about making the system make sense and it's been built over decades. At this point it's incredibly complicated. It no longer makes sense for people. So he's taking his gambles that do streamlining and clarification of the pension system will ultimately be some things that the French electorate and public opinion will be grateful for. At this point it looks like an incredibly audacious gamble because you have all these demonstrations and strikes and colorful images on the screen. But it may still pay off. So. So I think we we're at an early stage of this issue. So when. Nicolas. Great to see you by the way. Is this gamble likely to pay off for my call in terms of the impact on the economy in terms of the economy. McCall has been doing structural reform according to what he committed to during his campaign since the beginning of his term. So this is part of a sequence and he's long term greedy as he used to say. So he expects and wants to be re-elected in 2022. He expects to pay. Yes. To come gradually over the next years but not in the next twelve months. Now of course the next big election deadline is 2022. So it gives him almost two more than two years. It's not a lot but that's enough time to recover from his current threat to the unpopular position . So you know 20 years ago you were advising the government you've got a lot of experience in these things. Do the French unions have a history of being able to really make changes affect change in politics. I mean for example could Macron face career ending protests here because he doesn't seem to have been hit that hard or at least he handled definitely the yellow vest protests. You use the right word . He's very deft at these things the French unions have a culture of hard bargaining. They also have to be sure to make sure they are not overwhelmed by the aspirations of their base and by the anger at the grassroots. So it's a difficult game to play for the unions. A bargain is a better solution for them. But if it's a bargain it's some things that will make the base angry . It cannot go for it. So that's a balance. My call is very strategic . He will negotiate also in a spirit of hard bargaining. Again at this point too early to say. But you're right. I mean he went through a very difficult sequence of opposition was a yellow vest. He has handled it very deftly. One other area where you have been very influential NIKKEI is in terms of your advocacy of European Banking Union. I mean we've got an ECB meeting happening today. And so it gives us an opportunity to talk about some of the broader issues facing Europe is the prospect of a banking union. And while you might advocate for something that you realistically see happening at anytime in the near future we'll look into a banking union has started in Europe in 2012. How has being the establishment of the single supervisory mechanism for all eurozone banks. There are some elements of common crisis management but it's still a halfway house and a must banking union which is to break the vicious circle between banks and sovereigns which almost brought the eurozone in 2011 2012. So this has not been achieved yet. There has been a movement of policies. I think we're no longer there. We're seeing a number of red lines eroding becoming maybe yellowish in the number of member states. So Germans used to say no way we can discuss deposit insurance at a European level anytime soon . Now to say we're ready to discuss with a hard position. So Italians said no way. We're going to discuss a regulatory treatment for sovereign exposure. It's moving away from their current exemption from capital regulations. Now they say we are ready to discuss them. It fits together with things like a safe asset. So this is. And those are hard bargaining proposition . It's not gonna be an easy proposition . Negotiations are a lot of special interests entrenched habits difficult things politically. But I think in the next 12 to 18 months not in the next two weeks but within the next 12 to 18 months there is a deal to be made that could be good for everybody. So I'm not predicting this will happen but I think it's within the scope of possibility .

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French Union Urges Dec. 17 Strike Over Pension Reform

Nicolas Veron, senior fellow at Bruegel & Peterson Institute for International Economics, discusses the call from French unions to strike again against the pension reform plan and the damage they have done to the French economy. He speaks on “Bloomberg Markets: European Open.” (Source: Bloomberg)

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