:00:00. > :00:07.the country towards dictatorship. There are accusations that the polls
:00:08. > :00:16.cannot be trusted. It is time for HARDtalk.
:00:17. > :00:23.My guest is one of the most influential voices in global
:00:24. > :00:27.finance. He was made Governor of the Central Bank of France following
:00:28. > :00:33.extent of being governor for 12 years. Before that, he was the vice
:00:34. > :00:37.president of the European Central Bank and has worked with every
:00:38. > :00:41.leading financial institution. He has been tasked with making the case
:00:42. > :00:47.for Paris as a financial hub following Brexit. Is he making too
:00:48. > :01:19.difficult a cell and damaging ties with the UK -- sell. Christian Noyer
:01:20. > :01:22.in Paris, welcome to HARDtalk This is the fourth President that you are
:01:23. > :01:26.serving under in some senior capacity. Emmanuel Macron is a
:01:27. > :01:32.former banker. Is he the right president at the right time for
:01:33. > :01:39.France? Well, first, thank you very much for inviting me. I think yes,
:01:40. > :01:47.absolutely. For the first time for many years, we have a president who
:01:48. > :01:53.was elected with a clear political programme for deep economic reforms,
:01:54. > :01:59.and he has a clear mandate to make difficult reforms in the labour
:02:00. > :02:04.market, and the tax regime, to have something much more business
:02:05. > :02:08.friendly, and this is going to take place quite rapidly. So I think that
:02:09. > :02:16.comes exactly at the right moment, because we are now in, in Europe in
:02:17. > :02:21.general, it in the eurozone, leaving the negative consequences the
:02:22. > :02:27.crisis. Growth is picking up, and I think it is the appropriate time to
:02:28. > :02:30.raise the growth potential and try to size the benefits of a full
:02:31. > :02:34.recovery. We will talk about the reforms in France presently, but
:02:35. > :02:38.just underscoring the approach, the intention to make friends more
:02:39. > :02:43.competitive is so that it can compete, for instance, in trying to
:02:44. > :02:46.pick up in picking up some of the business from the City of London,
:02:47. > :02:57.post-Brexit. Why is Paris best placed? I think there are several
:02:58. > :03:00.assets for Paris, which are generally recognised by all the
:03:01. > :03:06.institutions I am talking to. The first one is probably that Paris is
:03:07. > :03:10.the only big city comparable to London in size, with a range of
:03:11. > :03:17.active and activities, which means that there is a whole range of
:03:18. > :03:23.financial activities, big banks, and dealer and broker activities, but
:03:24. > :03:27.insurance asset management, financial technology, and there is
:03:28. > :03:33.no other comparable city in Europe. That is interesting, though. You say
:03:34. > :03:36.all that, and that is your opinion, obviously. But when you look at what
:03:37. > :03:41.major financial institutions are doing, they don't necessarily back
:03:42. > :03:50.Paris. Japan's biggest bank has decided to set up its new based in
:03:51. > :03:55.Amsterdam. Barclays have gone elsewhere. There is a lot of
:03:56. > :03:59.competition, is in there? That is absolutely true. One is to make a
:04:00. > :04:06.difference between the place where the financial institutions decide to
:04:07. > :04:10.put their legal entity, and the place where they would locate their
:04:11. > :04:15.activities. At a number of those which said that they would choose,
:04:16. > :04:20.or have chosen to have their legal entity, at least for the first two
:04:21. > :04:30.years, in, say Frank Little Amsterdam, or Dublin, they have told
:04:31. > :04:41.me they intend to concentrate sizeable activities in Paris. --
:04:42. > :04:46.Frankfurt. So it is not because the hub or the legal entity will be
:04:47. > :04:49.somewhere that it will be a concentration of all activities
:04:50. > :04:58.there. So I think it is a bit misleading to just look at those
:04:59. > :05:03.news. By the way, MUFG that you just mentioned as already had a bank in
:05:04. > :05:09.Amsterdam. So they keep using their banking there. Is this what you are
:05:10. > :05:13.being told. -- told? A lot of institutions are looking at
:05:14. > :05:21.Frankfurt, and of course Germany is the biggest economy in Europe. Many
:05:22. > :05:30.banks has said that Frankfurt is going to be their main base. Are you
:05:31. > :05:37.being told some indifferent behind-the-scenes? Absolutely. --
:05:38. > :05:42.something different. In Paris, there is a talent pool. Other cities are
:05:43. > :05:49.relatively small cities, and that includes transit. In franc that, for
:05:50. > :05:54.instance, the activities are concentrated in banking. But if you
:05:55. > :06:01.want to move a big number of staff, coming with families, spouses or
:06:02. > :06:08.partners, and want to find jobs in other activities, it is more
:06:09. > :06:12.difficult than in a big city like London or Paris. Who has
:06:13. > :06:19.specifically said this too? Do you want to name some of the banks? --
:06:20. > :06:30.said this to you. The majority of international banks, be they
:06:31. > :06:34.Americans or Europeans or sometimes Japanese or Asian in general, they
:06:35. > :06:39.tell me that, that they intend to put a sizeable part of their staff
:06:40. > :06:44.in Paris. OK. As it stands, the figure is like 30% of the European
:06:45. > :06:55.Union's financial assets managed in the City of London, which is twice
:06:56. > :07:00.as much then London's nearest rival, Paris. London is admired globally,
:07:01. > :07:05.and respected as your's financial centre. It does not necessarily mean
:07:06. > :07:10.that any business lost to the City of London post-Brexit is going to go
:07:11. > :07:14.the way of Frankfurt or Paris. Boris Johnson, the British Foreign
:07:15. > :07:18.Secretary, said the real rivals of the City of London are going to be
:07:19. > :07:24.in Hong Kong, Singapore, and New York. He has a point, doesn't he?
:07:25. > :07:30.First, I don't believe that London will disappear as a major financial
:07:31. > :07:33.centre. London will continue to have a very important role and
:07:34. > :07:38.activities, and that is a good thing. In particular, given the
:07:39. > :07:43.proximity and the facility to move between them London and Paris, I see
:07:44. > :07:51.a lot of easiness in having teams working in London and teams working
:07:52. > :07:55.in Paris. But more specifically to your question, if there are things
:07:56. > :07:58.that institutions have two move, and they will have to move some
:07:59. > :08:03.activities to the EU, it is because the rules will impose that those
:08:04. > :08:10.activities are done in the EU. -- to move. If they have to move to the
:08:11. > :08:16.EU, they cannot move to New York or to Asian places. They need to move
:08:17. > :08:19.to the EU or be given up. All the institutions say they want to
:08:20. > :08:23.continue servicing their clients, they do want to lose their capacity
:08:24. > :08:27.to service them. They don't want to lose the business related to it. So
:08:28. > :08:31.they will do what it is necessary to continue servicing the clients. So
:08:32. > :08:34.you just said that you don't agree that the City of London would
:08:35. > :08:37.necessarily suffer. So just broadening that point, do you think
:08:38. > :08:45.Britain will suffer economically as a result of Brexit? Two first, to
:08:46. > :08:49.the question, the City of London will lose something. There has been
:08:50. > :08:57.over the last 20 years, the concentration of something. London
:08:58. > :09:01.was the dominant financial centre, but Paris was an important financial
:09:02. > :09:07.centre. A lot was done in other cities, Frankfurt and so on. So
:09:08. > :09:12.there will be some loss for the City of London, but not to the point that
:09:13. > :09:17.the city would be badly damaged. If the City of London loses 15 or 20%
:09:18. > :09:24.of its activity, it will remain one of the biggest financial centres in
:09:25. > :09:28.the world. Second, more generally, on that - it depends on agreement
:09:29. > :09:33.that can be reached or not reached on trade. I think the most difficult
:09:34. > :09:41.part of the negotiations is indeed related to trade, manufacturing
:09:42. > :09:46.activities, agriculture and fisheries, and that will be
:09:47. > :09:50.difficult. That is the most important in my view for the future
:09:51. > :09:55.of the British economy. And there has been quite a controversy here in
:09:56. > :09:58.the UK. Boris Johnson, the Foreign Secretary, and Liam Fox, the
:09:59. > :10:04.international trade Secretary, perhaps not seeing eye to eye with
:10:05. > :10:09.Philip Hammond and Amber Rudd over the issue of freedom of movement of
:10:10. > :10:16.people post-Brexit. How does this row look from your side of the
:10:17. > :10:24.channel? Well, I think the basic view of the EU 27 is that if you
:10:25. > :10:30.want to continue to have full access to the market, be it for the
:10:31. > :10:38.long-term, or for a transition period, you need to, to follow all
:10:39. > :10:44.the major parts of the EU governance, and the EU governance of
:10:45. > :10:53.basically the capacity of its institutions to regulate the
:10:54. > :11:01.capacity -- to regulate, the capacity to reconcile disputes, and
:11:02. > :11:05.powers that are in the EU rules, freedom for goods and services, and
:11:06. > :11:11.financial flows, and not for people. After that, how it will be settled
:11:12. > :11:14.exactly will depend on the negotiations, of course. As the
:11:15. > :11:20.negotiations and the debate over Brexit continue, as we have been
:11:21. > :11:25.discussing, other EU countries are trying to capitalise on the
:11:26. > :11:32.situation post-Brexit. The French by Minister Eduard Phillippe has said
:11:33. > :11:41.that France will use all its power to make Paris the European financial
:11:42. > :11:45.capital. -- Prime Minister. But is this trying to capitalise on the
:11:46. > :11:54.spoils are little unsavoury? Especially given the strong alliance
:11:55. > :11:57.with the UK. I think you have two - I understand your question, but you
:11:58. > :12:02.have two take two things into consideration. One is that
:12:03. > :12:12.historically London has not been the financial centre of the EU for
:12:13. > :12:16.decades and decades. -- to take things. The result of hybrid
:12:17. > :12:28.concentration in London is the result of the single market, which
:12:29. > :12:36.means that a single regulation and a single judicial system. -- high
:12:37. > :12:46.broker concentration. Bizarrely, or to a point, the Grecian of the euro.
:12:47. > :12:51.-- -- the creation. We reached a state which is very different to 20
:12:52. > :12:56.years ago. Having the ambition to come back to what we had 20 years
:12:57. > :13:01.ago, it is not aggressive in any way. Coming back to a normal state
:13:02. > :13:05.of things. It is understandable that countries would be alive to the
:13:06. > :13:11.opportunities that Brexit might provide to, you know, present a
:13:12. > :13:15.different - different opportunities for countries. But what I want to
:13:16. > :13:20.put to you is that the French seem to go farther. Jeremy Broun, who is
:13:21. > :13:28.now the envoy for the Brexit operations of the City of London, in
:13:29. > :13:33.a leaked memo said this: The French are happy to see outcomes
:13:34. > :13:38.detrimental to the City of London, even if Paris is not the
:13:39. > :13:42.beneficiary. They are crystal clear in their underlying objective- the
:13:43. > :13:44.weakening of Britain. France sees Britain as anniversaries, not
:13:45. > :13:53.partners. What is your response about? This memo, whatever has been
:13:54. > :14:02.leaked, to me, is absolute nonsense. If I may say so. With all due
:14:03. > :14:09.respect to whoever. He is reported to have this you, I don't know. I
:14:10. > :14:13.did not check myself. But I think the report, the presentation is
:14:14. > :14:17.really not that great at all. France is in the same position as the rest
:14:18. > :14:22.of the EU. The position is embedded in a common position. The chief
:14:23. > :14:30.negotiator is Michel Barnier. And he is the one who clearly said, and
:14:31. > :14:36.will say it what needs to be said from this site, from the EU. So
:14:37. > :14:40.there is no willingness to create problems for the City of London or
:14:41. > :14:45.the UK. But one is to recognise that we have, we have eight common
:14:46. > :14:49.concern, that is an enormous concern, and that is financial
:14:50. > :14:53.stability. I mean, we just went through - the world just went
:14:54. > :15:00.through an enormous financial crisis. We know it is absolutely key
:15:01. > :15:04.to have the capacity to regulate and supervise, with full capacity, and
:15:05. > :15:09.full powers, the financial sector, and a financial activities. And when
:15:10. > :15:16.you have financial stability concerns, you have to make, to take
:15:17. > :15:20.decisions as to what is best or worse in the different options that
:15:21. > :15:27.are offered to you, and only those responsible for the monetary area
:15:28. > :15:31.can do that. So it must be the EU institutions having this power. And
:15:32. > :15:38.I cannot imagine- if it was imaginable that the City of London
:15:39. > :15:42.was dealing with the euro, and would be regulated by EU institutions,
:15:43. > :15:48.where the judge would be in the European Court of Justice, but the
:15:49. > :15:55.central bank, with full, 100% power, in the euro system, and the market
:15:56. > :15:59.regulator would be established in Paris, with no powerful Westminster,
:16:00. > :16:03.or the Bank of England, or for the UK regulator, then maybe we could
:16:04. > :16:10.have another system. But I do believe that this is, that this is
:16:11. > :16:16.imaginable. This is why we believe that...
:16:17. > :16:28.A rather large and so. The election of a medal in May, we are seeing
:16:29. > :16:38.France in a more assertive way than it was under Francois Lond. --
:16:39. > :16:44.Emmanuel Macron. He wants to make it more market oriented. There is a
:16:45. > :16:52.great deal of opposition within fronted self from ordinary citizens.
:16:53. > :17:01.-- France itself. The labour market reform, the first one to be
:17:02. > :17:05.implemented, is a perfect example of something which is processed quite
:17:06. > :17:11.smoothly and very well. There have been many discussions with the
:17:12. > :17:28.unions. There was no big opposition. Can I just interrupted? The CGT is
:17:29. > :17:32.saying it is getting ready for street protests for relaxing these
:17:33. > :17:36.labour laws, to make it easier to hire and fire workers. We will have
:17:37. > :17:40.to wait and see. At the moment, things are going smoothly. The
:17:41. > :17:49.discussions have gone through all of the topics. For a number of things,
:17:50. > :17:56.it was largely consensual. The Parliament as well has an enormous
:17:57. > :18:06.majority, well beyond a simple party supporting President Macron. But
:18:07. > :18:12.there is still... Can I just say, there is still protesting going on.
:18:13. > :18:19.800,000 students upset about cuts to allowances. Civil servants,
:18:20. > :18:27.teachers, several sectors are opposed. Well, you should not mix
:18:28. > :18:31.everything. There was no big demonstration at the moment. Nothing
:18:32. > :18:37.happened in Paris. No one is in the streets demonstrating. Yes, there
:18:38. > :18:46.was some opposition expressed about some fiscal measures taken. The
:18:47. > :18:56.government has to make cuts in spending. They tried to find ways to
:18:57. > :19:02.do that as smoothly as possible. But it... The problem exists in all
:19:03. > :19:06.countries, in many countries. I want to come back to the series of
:19:07. > :19:12.reforms, we don't have time to go into all of them, they are to make
:19:13. > :19:16.France more competitive, but it is perceived in that way. For example,
:19:17. > :19:24.the French economic observatory had a study in July saying the richest
:19:25. > :19:28.10% in France gave the most from the overhaul from income and property
:19:29. > :19:47.taxation. I cannot go into that completely but that is one example,
:19:48. > :19:51.and also, the measures hit the poorest foremost. That is a quote.
:19:52. > :19:54.When you meet the press, you don't get that feeling there is such
:19:55. > :19:58.opposition at the moment. I have never seen in many years so much
:19:59. > :20:05.consensus to support the global economic reforms in the making. I
:20:06. > :20:13.think people are ready to understand that labour market reforms are aimed
:20:14. > :20:17.at reducing unemployment that we have not been able to reduce
:20:18. > :20:23.significantly over the last decade. It is something we have not tried
:20:24. > :20:27.until now. Until the first reforms were made. It is rather consensual.
:20:28. > :20:36.They address the problem of unemployment. But you have got a
:20:37. > :20:42.huge... Sorry. The tax reforms. Of course, the direct taxation would be
:20:43. > :20:50.the wealth tax, income tax. It is extremely concentrated in France.
:20:51. > :20:55.OK... 60% of... We cannot go into the details of the taxation system.
:20:56. > :20:59.But one other example as to why perhaps it is not as smooth as you
:21:00. > :21:05.suggest. President Macron has seen his approval ratings plummet by ten
:21:06. > :21:17.points to 54%, the best declined when compared to predecessors, like
:21:18. > :21:21.Francois Lond and Nicolas Sarkozy. -- Hollande. I don't want to
:21:22. > :21:29.comment. I am not a political and take. That was just an example. But
:21:30. > :21:35.in general, the policy was widely supported. At least for the moment.
:21:36. > :21:38.The people so want to give a chance to be president and the government
:21:39. > :21:43.to make the economic reforms and move ahead. Of course, you have to
:21:44. > :21:52.make cuts in expenditure, and it always creates opposition. I don't
:21:53. > :21:56.think it is significant. There is still the necessary support to make
:21:57. > :22:01.these reforms. It really addresses unemployment. But you are going to
:22:02. > :22:05.have, in terms of the image of France, that its reputation is still
:22:06. > :22:13.a place that is difficult to do business. France was 29th in terms
:22:14. > :22:21.of this. The UK, seventh. In June, a report said a banker in France costs
:22:22. > :22:25.54% more when all payroll charges are included. It takes you three
:22:26. > :22:28.years to fire someone in France compared to three months in
:22:29. > :22:34.Switzerland and three days in the UK. You have still got a long way to
:22:35. > :22:46.go to convince people that somebody such as US tried to do this. What I
:22:47. > :22:50.can say is that it is misleading. -- such as you is trying to. It does
:22:51. > :22:57.not take three months. It takes 4-6 months. It is comp ruble to Germany,
:22:58. > :23:08.the maximum in Germany, or the UK. -- comp comparable. All of those
:23:09. > :23:15.reports I made... I am telling you... They are not... Can I
:23:16. > :23:26.interrupt you to give you the source? It was the Head of UBS
:23:27. > :23:36.France, who told a committee earlier this year. It is a recent statement.
:23:37. > :23:42.Well, it was probably taken from reports done four years ago. Before
:23:43. > :23:46.2013, yes, the situation was really different. But in the meantime, we
:23:47. > :23:51.have made four incremental reforms on the labour market. I think we
:23:52. > :23:54.already have the situation which is not so different from Germany. And
:23:55. > :24:02.with new reforms, we will move somewhere a twin Germany and the UK.
:24:03. > :24:06.-- between. Hopefully closer to the UK. It will be a different
:24:07. > :24:13.situation. It won't be that far away from the UK, perhaps Ireland. It
:24:14. > :24:26.will have a more flexible labour market. Christian Noyer, in Paris,
:24:27. > :24:29.thank you very much indeed for coming on HARDtalk. Thank you very
:24:30. > :24:45.much. The area of low pressure that
:24:46. > :24:48.brought Wednesday's rain