Christian Noyer, governor of the Bank of France (2003-2015) HARDtalk


Christian Noyer, governor of the Bank of France (2003-2015)

Zeinab Badawi speaks to Christian Noyer, one of the most influential voices in global finance today. Is his selling of Paris as a financial hub following Brexit too tough?


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the country towards dictatorship. There are accusations that the polls

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cannot be trusted. It is time for HARDtalk.

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My guest is one of the most influential voices in global

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finance. He was made Governor of the Central Bank of France following

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extent of being governor for 12 years. Before that, he was the vice

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president of the European Central Bank and has worked with every

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leading financial institution. He has been tasked with making the case

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for Paris as a financial hub following Brexit. Is he making too

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difficult a cell and damaging ties with the UK -- sell. Christian Noyer

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in Paris, welcome to HARDtalk This is the fourth President that you are

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serving under in some senior capacity. Emmanuel Macron is a

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former banker. Is he the right president at the right time for

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France? Well, first, thank you very much for inviting me. I think yes,

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absolutely. For the first time for many years, we have a president who

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was elected with a clear political programme for deep economic reforms,

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and he has a clear mandate to make difficult reforms in the labour

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market, and the tax regime, to have something much more business

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friendly, and this is going to take place quite rapidly. So I think that

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comes exactly at the right moment, because we are now in, in Europe in

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general, it in the eurozone, leaving the negative consequences the

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crisis. Growth is picking up, and I think it is the appropriate time to

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raise the growth potential and try to size the benefits of a full

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recovery. We will talk about the reforms in France presently, but

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just underscoring the approach, the intention to make friends more

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competitive is so that it can compete, for instance, in trying to

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pick up in picking up some of the business from the City of London,

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post-Brexit. Why is Paris best placed? I think there are several

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assets for Paris, which are generally recognised by all the

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institutions I am talking to. The first one is probably that Paris is

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the only big city comparable to London in size, with a range of

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active and activities, which means that there is a whole range of

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financial activities, big banks, and dealer and broker activities, but

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insurance asset management, financial technology, and there is

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no other comparable city in Europe. That is interesting, though. You say

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all that, and that is your opinion, obviously. But when you look at what

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major financial institutions are doing, they don't necessarily back

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Paris. Japan's biggest bank has decided to set up its new based in

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Amsterdam. Barclays have gone elsewhere. There is a lot of

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competition, is in there? That is absolutely true. One is to make a

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difference between the place where the financial institutions decide to

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put their legal entity, and the place where they would locate their

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activities. At a number of those which said that they would choose,

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or have chosen to have their legal entity, at least for the first two

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years, in, say Frank Little Amsterdam, or Dublin, they have told

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me they intend to concentrate sizeable activities in Paris. --

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Frankfurt. So it is not because the hub or the legal entity will be

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somewhere that it will be a concentration of all activities

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there. So I think it is a bit misleading to just look at those

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news. By the way, MUFG that you just mentioned as already had a bank in

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Amsterdam. So they keep using their banking there. Is this what you are

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being told. -- told? A lot of institutions are looking at

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Frankfurt, and of course Germany is the biggest economy in Europe. Many

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banks has said that Frankfurt is going to be their main base. Are you

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being told some indifferent behind-the-scenes? Absolutely. --

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something different. In Paris, there is a talent pool. Other cities are

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relatively small cities, and that includes transit. In franc that, for

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instance, the activities are concentrated in banking. But if you

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want to move a big number of staff, coming with families, spouses or

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partners, and want to find jobs in other activities, it is more

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difficult than in a big city like London or Paris. Who has

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specifically said this too? Do you want to name some of the banks? --

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said this to you. The majority of international banks, be they

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Americans or Europeans or sometimes Japanese or Asian in general, they

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tell me that, that they intend to put a sizeable part of their staff

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in Paris. OK. As it stands, the figure is like 30% of the European

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Union's financial assets managed in the City of London, which is twice

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as much then London's nearest rival, Paris. London is admired globally,

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and respected as your's financial centre. It does not necessarily mean

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that any business lost to the City of London post-Brexit is going to go

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the way of Frankfurt or Paris. Boris Johnson, the British Foreign

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Secretary, said the real rivals of the City of London are going to be

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in Hong Kong, Singapore, and New York. He has a point, doesn't he?

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First, I don't believe that London will disappear as a major financial

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centre. London will continue to have a very important role and

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activities, and that is a good thing. In particular, given the

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proximity and the facility to move between them London and Paris, I see

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a lot of easiness in having teams working in London and teams working

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in Paris. But more specifically to your question, if there are things

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that institutions have two move, and they will have to move some

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activities to the EU, it is because the rules will impose that those

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activities are done in the EU. -- to move. If they have to move to the

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EU, they cannot move to New York or to Asian places. They need to move

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to the EU or be given up. All the institutions say they want to

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continue servicing their clients, they do want to lose their capacity

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to service them. They don't want to lose the business related to it. So

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they will do what it is necessary to continue servicing the clients. So

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you just said that you don't agree that the City of London would

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necessarily suffer. So just broadening that point, do you think

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Britain will suffer economically as a result of Brexit? Two first, to

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the question, the City of London will lose something. There has been

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over the last 20 years, the concentration of something. London

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was the dominant financial centre, but Paris was an important financial

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centre. A lot was done in other cities, Frankfurt and so on. So

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there will be some loss for the City of London, but not to the point that

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the city would be badly damaged. If the City of London loses 15 or 20%

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of its activity, it will remain one of the biggest financial centres in

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the world. Second, more generally, on that - it depends on agreement

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that can be reached or not reached on trade. I think the most difficult

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part of the negotiations is indeed related to trade, manufacturing

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activities, agriculture and fisheries, and that will be

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difficult. That is the most important in my view for the future

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of the British economy. And there has been quite a controversy here in

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the UK. Boris Johnson, the Foreign Secretary, and Liam Fox, the

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international trade Secretary, perhaps not seeing eye to eye with

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Philip Hammond and Amber Rudd over the issue of freedom of movement of

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people post-Brexit. How does this row look from your side of the

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channel? Well, I think the basic view of the EU 27 is that if you

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want to continue to have full access to the market, be it for the

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long-term, or for a transition period, you need to, to follow all

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the major parts of the EU governance, and the EU governance of

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basically the capacity of its institutions to regulate the

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capacity -- to regulate, the capacity to reconcile disputes, and

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powers that are in the EU rules, freedom for goods and services, and

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financial flows, and not for people. After that, how it will be settled

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exactly will depend on the negotiations, of course. As the

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negotiations and the debate over Brexit continue, as we have been

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discussing, other EU countries are trying to capitalise on the

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situation post-Brexit. The French by Minister Eduard Phillippe has said

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that France will use all its power to make Paris the European financial

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capital. -- Prime Minister. But is this trying to capitalise on the

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spoils are little unsavoury? Especially given the strong alliance

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with the UK. I think you have two - I understand your question, but you

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have two take two things into consideration. One is that

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historically London has not been the financial centre of the EU for

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decades and decades. -- to take things. The result of hybrid

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concentration in London is the result of the single market, which

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means that a single regulation and a single judicial system. -- high

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broker concentration. Bizarrely, or to a point, the Grecian of the euro.

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-- -- the creation. We reached a state which is very different to 20

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years ago. Having the ambition to come back to what we had 20 years

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ago, it is not aggressive in any way. Coming back to a normal state

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of things. It is understandable that countries would be alive to the

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opportunities that Brexit might provide to, you know, present a

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different - different opportunities for countries. But what I want to

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put to you is that the French seem to go farther. Jeremy Broun, who is

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now the envoy for the Brexit operations of the City of London, in

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a leaked memo said this: The French are happy to see outcomes

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detrimental to the City of London, even if Paris is not the

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beneficiary. They are crystal clear in their underlying objective- the

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weakening of Britain. France sees Britain as anniversaries, not

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partners. What is your response about? This memo, whatever has been

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leaked, to me, is absolute nonsense. If I may say so. With all due

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respect to whoever. He is reported to have this you, I don't know. I

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did not check myself. But I think the report, the presentation is

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really not that great at all. France is in the same position as the rest

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of the EU. The position is embedded in a common position. The chief

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negotiator is Michel Barnier. And he is the one who clearly said, and

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will say it what needs to be said from this site, from the EU. So

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there is no willingness to create problems for the City of London or

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the UK. But one is to recognise that we have, we have eight common

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concern, that is an enormous concern, and that is financial

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stability. I mean, we just went through - the world just went

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through an enormous financial crisis. We know it is absolutely key

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to have the capacity to regulate and supervise, with full capacity, and

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full powers, the financial sector, and a financial activities. And when

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you have financial stability concerns, you have to make, to take

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decisions as to what is best or worse in the different options that

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are offered to you, and only those responsible for the monetary area

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can do that. So it must be the EU institutions having this power. And

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I cannot imagine- if it was imaginable that the City of London

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was dealing with the euro, and would be regulated by EU institutions,

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where the judge would be in the European Court of Justice, but the

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central bank, with full, 100% power, in the euro system, and the market

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regulator would be established in Paris, with no powerful Westminster,

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or the Bank of England, or for the UK regulator, then maybe we could

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have another system. But I do believe that this is, that this is

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imaginable. This is why we believe that...

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A rather large and so. The election of a medal in May, we are seeing

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France in a more assertive way than it was under Francois Lond. --

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Emmanuel Macron. He wants to make it more market oriented. There is a

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great deal of opposition within fronted self from ordinary citizens.

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-- France itself. The labour market reform, the first one to be

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implemented, is a perfect example of something which is processed quite

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smoothly and very well. There have been many discussions with the

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unions. There was no big opposition. Can I just interrupted? The CGT is

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saying it is getting ready for street protests for relaxing these

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labour laws, to make it easier to hire and fire workers. We will have

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to wait and see. At the moment, things are going smoothly. The

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discussions have gone through all of the topics. For a number of things,

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it was largely consensual. The Parliament as well has an enormous

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majority, well beyond a simple party supporting President Macron. But

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there is still... Can I just say, there is still protesting going on.

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800,000 students upset about cuts to allowances. Civil servants,

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teachers, several sectors are opposed. Well, you should not mix

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everything. There was no big demonstration at the moment. Nothing

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happened in Paris. No one is in the streets demonstrating. Yes, there

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was some opposition expressed about some fiscal measures taken. The

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government has to make cuts in spending. They tried to find ways to

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do that as smoothly as possible. But it... The problem exists in all

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countries, in many countries. I want to come back to the series of

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reforms, we don't have time to go into all of them, they are to make

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France more competitive, but it is perceived in that way. For example,

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the French economic observatory had a study in July saying the richest

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10% in France gave the most from the overhaul from income and property

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taxation. I cannot go into that completely but that is one example,

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and also, the measures hit the poorest foremost. That is a quote.

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When you meet the press, you don't get that feeling there is such

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opposition at the moment. I have never seen in many years so much

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consensus to support the global economic reforms in the making. I

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think people are ready to understand that labour market reforms are aimed

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at reducing unemployment that we have not been able to reduce

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significantly over the last decade. It is something we have not tried

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until now. Until the first reforms were made. It is rather consensual.

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They address the problem of unemployment. But you have got a

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huge... Sorry. The tax reforms. Of course, the direct taxation would be

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the wealth tax, income tax. It is extremely concentrated in France.

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OK... 60% of... We cannot go into the details of the taxation system.

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But one other example as to why perhaps it is not as smooth as you

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suggest. President Macron has seen his approval ratings plummet by ten

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points to 54%, the best declined when compared to predecessors, like

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Francois Lond and Nicolas Sarkozy. -- Hollande. I don't want to

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comment. I am not a political and take. That was just an example. But

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in general, the policy was widely supported. At least for the moment.

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The people so want to give a chance to be president and the government

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to make the economic reforms and move ahead. Of course, you have to

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make cuts in expenditure, and it always creates opposition. I don't

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think it is significant. There is still the necessary support to make

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these reforms. It really addresses unemployment. But you are going to

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have, in terms of the image of France, that its reputation is still

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a place that is difficult to do business. France was 29th in terms

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of this. The UK, seventh. In June, a report said a banker in France costs

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54% more when all payroll charges are included. It takes you three

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years to fire someone in France compared to three months in

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Switzerland and three days in the UK. You have still got a long way to

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go to convince people that somebody such as US tried to do this. What I

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can say is that it is misleading. -- such as you is trying to. It does

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not take three months. It takes 4-6 months. It is comp ruble to Germany,

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the maximum in Germany, or the UK. -- comp comparable. All of those

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reports I made... I am telling you... They are not... Can I

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interrupt you to give you the source? It was the Head of UBS

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France, who told a committee earlier this year. It is a recent statement.

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Well, it was probably taken from reports done four years ago. Before

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2013, yes, the situation was really different. But in the meantime, we

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have made four incremental reforms on the labour market. I think we

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already have the situation which is not so different from Germany. And

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with new reforms, we will move somewhere a twin Germany and the UK.

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-- between. Hopefully closer to the UK. It will be a different

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situation. It won't be that far away from the UK, perhaps Ireland. It

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will have a more flexible labour market. Christian Noyer, in Paris,

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thank you very much indeed for coming on HARDtalk. Thank you very

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much. The area of low pressure that

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brought Wednesday's rain

:24:46.:24:48.

Zeinab Badawi speaks to Christian Noyer, one of the most influential voices in global finance today. He was made honorary governor of the central Bank of France, following a period as governor for 12 years. Prior to that, he was a vice president of the European Central Bank and has worked for various leading international financial institutions.

Christian Noyer has been tasked with making the case for Paris as a financial hub following Brexit. Is he making too tough a sell and potentially damaging ties with the UK?