France economy

Europe can’t winter thinking all is lost


Europe is getting back to business after its summer break – but this year it’s like jumping into a cold shower. Just listen to Emmanuel Macron. The French president told his ministers at their first official meeting last week that a new paradigm is on the horizon – it’s the end of abundance in a carefree world.

It’s a sobering statement coming from the land of affluence itself. The history of France is shaped by splendour; its national ethos pursues the grandiosity in the values ​​it represents and the role of balancing power — a power of mediation — that it seeks to play on the international scene. Luxury is also a real source of income for the French economy – the industry thrives on insatiable consumer demand.

All of this contrasts with Macron’s statements, which critics have called crude, pessimistic, even defeatist. Yet, even if the message was not the most acceptable, it was important. The truth is that Macron’s words only catch up with the reality of what Europe is facing. Russia is wreaking havoc on the energy market, inflation is rampant, and governments are actively seeking to destroy demand to avoid rationing. The opposite of abundance is scarcity. The reverse of opulence is sobriety. Why sugarcoat things?

The French president is used to shaking up public opinion with shocking statements. He once described NATO as brain dead and suggested he would be happy to piss off (“piss off”) unvaccinated people if it helped boost France’s vaccination rate. His tone and language are often divisive. The political left has previously accused Macron of being out of touch – a recurring criticism – if he thinks the French working class lives in opulence, especially as the cost of living crisis bites into low wages. Marine le Pen, his political enemy, said that the crisis scenario he presented is not only the result of the war, but also of his politics.

Some of Macron’s ministers rushed to clarify his remarks hours later, suggesting the president is not defeatist but lucid. It was a damage limitation exercise, but the tone was set. Much of the televised commentary that followed was devoted to debating the sacrifices that will be demanded of the public. In this sense, Macron’s language contrasts with that of the administration of Joe Biden, who hesitates to fuel the speeches on the recession, and even of the British Liz Truss, favorite of the leader of the conservative party, who refuses to believe that a recession is inevitable despite the Bank of England predicting one. And the UK arguably faces a much darker picture than France.

In 1979, former US President Jimmy Carter uttered what some have described as the height of pessimism in politics. Against a backdrop of inflation and pain at the gas pump, he argued that America was going through a “crisis of confidence” – in the future and in the nation – that threatened the very social fabric of the country. As Europe struggles with the effects of Russia’s war in Ukraine, Carter’s speech rings true today. Much will be decided by the determination of the bloc to remain united, to show confidence and determination.

I have long argued that many Europeans are still in denial about how a harsh winter could hamper the economy. For households and businesses, this could impose drastic choices: buy fuel or buy goods, stay open or close shop. However, a confrontation with reality does not mean fatalism.

For Macron, who has already gone through a traumatic period of social unrest with the yellow vest protests in 2018, fatalism risks undermining his own government. The French capped energy prices, absorbing much of the pain through the utility Electricité de France, which reported a loss of 5 billion euros ($5 billion) in the first six months of the year, and cushioning the blow for consumers. Despite the malaise, France currently has one of the lowest inflation rates in the eurozone. In this sense, Macron is buying social peace, just as he did with his recovery plan “at all costs” during the pandemic closures. The government should not give the impression that it is throwing in the towel now.

Defeatism also risks undermining public support for Ukraine. Russia wants to see Europe reach its breaking point and ease sanctions. Despite the obvious stress in the energy market, where futures gas and electricity prices are reaching new highs almost every week, the EU has so far signaled that it will not back down. Even Macron himself has recently suggested that there is no room for compromise with Vladimir Putin under the current circumstances. Ultimately, he argued, it’s also a battle of values.

This is encouraging, but maintaining morale will become more difficult as the days get colder, especially if we are told that everything is doomed from the start. For Ukrainians, who are paying a heavy price in blood and destruction, this is a disservice.

Macron also spoke of a range of crises, ranging from war to climate-related events to supply chain issues. These are important questions, but such an amalgam can confuse public opinion and dilute Putin’s responsibility in the current situation. If he hadn’t invaded Ukraine, we wouldn’t be talking about an energy crisis of this magnitude.

Europe is entering uncharted waters this winter. We must remain lucid about the risks, but let’s not enter the storm by assuming that all is already lost.

More from Bloomberg Opinion:

• Listening to European electricity traders is very, very scary: Javier Blas

• Then the Supreme Court decides how to punish American expats: Andreas Kluth

• Don’t guess Putin’s next move. Listen: Maria Tadeo

This column does not necessarily reflect the opinion of the Editorial Board or of Bloomberg LP and its owners.

Maria Tadeo is Bloomberg Television’s European correspondent based in Brussels where she covers European politics, economics and NATO.

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