24/04/2017 World Business Report

And then there were two - the final candidates for the French

presidency have been chosen but what economic challenges

And 10,000 times stronger than the real thing -

we take a look at an artificial sun in Germany and what it means

Also in the programme, the euro has spiked in value

following the outcome of Sundays vote in France.

Rico will have the latest in a moment.

as you've been hearing, the French have voted on who will go

though to the final run-off for the Presidency on May 7th.

As widely expected, centrist Emmanuel Macron and far-right

It's been the most unpredictable presidential election in France's

history but there are some constants -

namely, the economic problems and challenges that remain whoever

walks into the Elysee Palace.

A key issue is unemployment, currently at 10% in France.

Almost three million people are out of work.

Not as bad as some eurozone neighbours, but above average

for the region and far worse than, for example, Germany,

where it is below 4% and the UK it's 4.7%.

Deep-rooted structural problems make its labour market inflexible.

One example, companies find it it harder and less attractive to hire

Firing them is tricky, too, due to complex dismissal procedures.

Then there's the infamous working week.

While long-hours are not banned, anything over 35-hours

French government debt is close to 100% of GDP.

The International Monetary Fund has warned if economic growth weakens

significantly and the state get less tax revenues,

then its debt burden could rise further.

And the vast public sector in France is a huge strain on state finances -

the nation has one of the highest public spending ratios among

developed economies at more than half of total national output.

Joining me now from Paris is Laurent Clavel, head

of macroeconomic research at AXA Investment Managers.

Good morning, thank you for being with us. Good morning. First of all,

give us your reaction to this outcome on Sunday. The Euro spiking

to a 5- month high. Why? Why are they ploughing into the euro, do you

think? Well, as you said earlier, it was very difficult to predict this

election and we have developed our own model to correct and aggregate

poles and we had a roughly 20 cents chance to have a market unfriendly

outcome which would have dampened the euro and now, the result from

yesterday is in the direction that this probability is revised down

quite significantly and therefore it is quite natural for us that we

would see the euro appreciate a little, only a little, because the

risk scenario was less likely than our baseline which was what we see

today. And what do you think will happen next in terms of who will

come out winner in a couple of weeks time? Those that lost out have

rallied behind Emmanuel Macron, will he get the job? Yeah, that's

definitely the baseline scenario. A 20% probability of a risk to have a

market on family out, and the French election, we have come down somehow,

somewhat, the risk is not completely gone, obviously, and turnout will be

key on a turnout was very strong yesterday, almost 80% which is in

line with the average we have seen in the past 40 years in presidential

elections in the run-off and now that there was a large turnout, it's

not obvious that you will get the same in the run-off at a low turnout

would favour Marine Le Pen. The polls we have had for the run-off in

the case of Macron- the pen, we are giving a clear victory to Macron,

are close to 30 point lead. If he doesn't get the job, what will it

mean for the French economy? I would say for the markets, the reform and

who is the final President won't matter as much as the fact that we

have two candidates that a credible and have a clearly market unfriendly

agenda were questioning the unity of the eurozone. So now that it is

almost out, on May seven and our baseline will be completely out, you

get a limited relief rally. For the French economy it is a different

question. Here, the real trigger will be the general elections. This

is completely new candidate with a new party behind him. We are talking

about En Marche! And it is fairly unlikely that you would get an

outright majority in Parliament. So we are heading for something quite

original in the history of the republic of France which is we may

get to a Coalition. We have to leave it there. Thank you for your

analysis this morning. Let's talk more about the market reaction.

The value of the euro jumped to a five-month high,

after the first round of voting in the French presidential election

Let's see how it's fared in Asian trading -

Rico Hizon is in our Asia Business Hub in Singapore.

Lovely to see you Rico. Tell us about what is happening in the

markets. If you take a look at the euro trading in Asia there has been

a lot of movement, Sally, over the past few hours. Investors are

breathing a sigh of relief, the market favourite candidate won

through to the first round of the French election. The risk of a

Brexit- like shock and sparking a mass unwinding of safe haven trades.

The euro earlier in Asian trade, trading as high as 1.0, up by about

2%, but a lot of volatility in midday trading with the euro now

dipping to about 1.08 44 to the US dollar against the Japanese

currency, the euro hit 120.91 yen in early Asian trade and now on - 19.

Over all traders expect investors to be jittery yet again, closer to the

second round of voting on May seven. Some say that if Le Pen wins the

presidential election, the euro could take a huge fall and

potentially hit parity with the US dollar. Other currency analyst say

Le Pen is one big hurdle for the euro, there are more election is

coming this year in Germany and Italy and certainly it could lead to

more euro. Thank you, Rico. We will see you more very soon.

Germany has one of the highest solar power capacities in the world,

That's why scientists at the German Aerospace Centre

in Julich have built a unique facility -

with an artificial sun with a glare that's 10,000 times the intensity

All to create technologies that will make solar an ever more

A cloudy day in rural Germany, OK for the coal mines in wind -- and

wind turbines but less so for the solar tower which is why scientists

at the German aerospace centre have taken the research indoors. This

facility gives us consistent artificial light which is very

useful, especially here in west Germany, the weather is not perfect

and we have very rare sunlight and so we have a facility which gives

unlimited light. This is the world's largest artificial sun are composed

of 149 projection lights. Together, they commit a bean which is 1000

times the strength of a regular household bulb and 10,000 times the

strength of the sun's race here on earth. And scientists here can use

it to test the solar power instruments of the future. This is

one of our first experiments, and a typical one. It is a hydrogen react

and this reactor, we want to develop a process on splitting water from

solar energy to store this energy and to make it available in fuels.

When we focus on it, we think we can reach temperatures of around 3000dC

so this is more than a combustion processes can generate. The hope is

that this facility can improve the efficiency of solar energy reactors.

But with the oil price is still relatively low, commercial interest

in its research may take some time. Joe Miller, BBC News, Munich.