According to the Financial Times, Paris should be the big winner in a post-Brexit Europe next year. Brexit will take in effect next March, and while the French government is preparing for a no-deal situation, financial institutions are well as banks have already planned to leave London for other European destinations.
After Emmanuel Macron organized a big meeting two weeks ago at the biggest start-up incubator Station F, it seems that tech companies are attracted by French tax reforms. However, the battle against GAFAM that Emmanuel Macron has started might repel tech entrepreneurs, as France keeps its protectionist policy.
With the rise of French Tech and other initiatives backed by the government, France is trying hard to ignite a brain drain from all over European countries.
Its goal is to take advantage of a large uncertain political situation in the Old Continent, in order to become a top destination for investors. And with a central geographical location and a close proximity with the United Kingdom, it seems that the Brexit might boost the French economy.
However, financial jobs transferred to France might not benefit to everyone. While alt-right French leader Marine le Pen went until the second round for the Presidential elections last year, the country might have to monitor how its electorate evolve.
As time goes by, the traditional middle class in France and in all old countries continues to disappear. This phenomenon might result in a rise of populism – reminding the older generation of the darkest times of the twentieth century. As German’s Angela Merkel announced she will step out by 2021, it seems that Europe might fly through some political turbulences.
Last but not least, the French economy might not be as solid as it seems. While the GDP the Italian government’s budget proposal was declined by the European Commission, France’s might be the next on the list.
While France is the second biggest economy in the European Union, a very serious study by CNBC revealed that the 2019 budget plan will dig a hole, falling from 0.1 percent in 2018 to 0.3 percent in 2019.
Between all these uncertainties, will France benefit economically from the Brexit? As the middle class is struggling with more poverty, Europe seems weaker than ever. Will France be strong enough to lead a fragmented continent?
Here is an in-depth analysis on what is to expect for the upcoming months.
A Solid Country In A Fragmented Eurozone
Europe was showing strong signs of financial growth lately… Until last week. When 13 year-long German chancellor Angela Merkel’s announced that she would step out of her role in 2021, markets collapsed across the continent. Paris CAC 40 fell by 0,57 percent at 4.960,8 points. Dax lost 0,65 percent.
As Merkel was a strong leader in Europe for the past decade, she managed to gather countries – and their forces – after the financial crisis in 2008.
A few years later, in 2013, when the Syria war ignited the migrants crisis, Merkel stood up for them and welcomed refugees in Germany, which put pressure on other countries to integrate asylum seekers and political refugees from the Middle East and Africa.
Heydays of a unified Europe seem now behind. As Brexit is taking effect next March and Italy’s budget plan for 2019 was just declined by the European Commission, Europe is on the verge of bursting.
From all parts, the Old Continent seems divided: economically, politically and socially.
So, what does happen when a continent is transitioning and that old-time leaders are about to leave the ship? New ones rise. It seems that Emmanuel Macron, who has been showing a strong interest in global leadership since his “Make the Planet Great Again” campaign, is on his way to becoming Europe’s first political influencer.
And indeed, the French President seems to take advantage of the whole uncertain situation. Lately, Emmanuel Macron has been seen like the new leader in Europe, making deals with major banks to transfer their offices to Paris’ central business district, La Défense and developing strong tech hubs to attract major talents.
Six months after Facebook’s Cambridge Analytica scandal, the French President visited the biggest startup incubator in Europe, Station F, located in Paris. His goal was to publicize and boast the opportunities available in the French capital for the world’s finest entrepreneurs. As he put a strong emphasis on fin-tech, Emmanuel Macron largely promoted the French Tech ecosystem in Europe.
In order to affirm Paris as Europe’s tech capital, Emmanuel Macron has implemented a strategy across his government.
— Real Marsha Wright® | CEO www.PromoNation.co (@marshawright) October 18, 2018
A few weeks ago, France’s Finance Minister Bruno le Maire stressed the European Union to create a special tax for GAFAM across the Continent – positioning France as a market expert leader, but also as a knowledgeable lawmaker. France’s goal is to add a three percent tax on GAFAM’s revenue – and not profit.
As a matter of fact, Bruno Le Maire had a good reason to push the tax plan on Europe’s agenda. It was one of the most anticipated promises during Emmanuel Macron’s presidential campaign last year. So far, the French government claims to have gathered the support of 19 countries including the United Kingdom.
GAFAM And The French Tax Plan
However, many countries do not back up this tax plan. A group of countries led by Ireland, including Malta, Luxembourg, Estonia, Sweden and the Czech Republic have expressed their will not to pass the law – as GAFAM’s gross revenue is playing a key role in their GDP.
But it seems that with time, GAFAM will not have a choice but to follow France’s intentions. And while European countries are divided, the results of this year’s tech giants might force them to change.
#GAFA's #taxation is now back on the table: France wants to move forward with a 3%tax on their revenues (and not on their profits), but will need to convince its European allies, inc. Ireland, to follow the same road. Lots of arm wrestling in perspective https://t.co/GRVHDCvLx5
— Acuitas Comms (@Acuitas_Comms) October 22, 2018
While France’s power of leverage is yet to be confirmed, numbers speak for themselves. Last week, Facebook’s end of year returns struck with some bad results.
Lately, Europeans have been deleting their Facebook accounts, losing interest and mistrusting the platform. In September, the daily average of users was 1.49 billion people, compared to its prediction of 1.51 billion. Sales have gone low, too: Facebook reported increased sales by 33 percent to £10.7 billion ($13.7 billion), while the previous quarter saw a gain of 42 percent.
Moreover, Facebook had to face a new data breach scandal last month as more than 50 million accounts in Europe were hacked. This could cost the company more than $1.6 billion, as the Internet giant might have to compensate data violation to each of its users.
Needless to say that this scandal only added more pressure for Mark Zuckerberg to maintain Facebook’s reputation.
In the meantime, the Guardian published GAFAM’s taxes escape in Europe, causing uproar in the public opinion. In 2017, Google only paid £49 million, for a gross revenue of £7.6 billion.
Last July, the European Commission fined Google £3.38 million for breaching the European Union’s competition rules by, among other things, forcing Android smartphone manufacturers to pre-install Google’s search engine, as well as Chrome Internet browser.
For the Commission, Google forced citizens to use its products – but despite the fine, it was clear that the latter was very little compared to the revenue made in 2017. However, it was enough for Google to think about a new strategy.
As a result, Google announced last week that new devices would be “free and open source” – a long-time ethos advertised by the Big Tech giant. “We will introduce a new paid licensing agreement for smartphones and tablets shipped into the European Economic Area”, shared Android leader Hiroshi Lockheimer to The Verge.
However, it seems that Google has found an alternative route to push Android products and to make the Google Store, despite its official policy change.
In order to purchase apps on their smartphones, Google has sharpened its marketing policy – making it impossible to break its monopoly. The European Commission, to this day, has not commented on this loophole.
But it is not only online that Google is facing with adversity. This week, Google has received bad news from Berlin’s Kreuzberg neighborhood council. A few days ago, the tech giant abandoned its plan to open a 32,000 square-foot campus in this area.
For two years, the locals were fighting against this project as the neighborhood has been facing an abrupt gentrification over the past decade, which resulted in the evictions of thousands of locals locals. As the dramatic rent increase shook the population to its core, Google’s future campus was too much for them to take.
And this is not the first time that a tech giant is dealing with locals’ anger. Google is not the only GAFA to undergo a rough patch in Europe. While American cities are battling to host Amazon HQ’s 2, European cities and residents seem to have a radical different opinion about those companies.
As for Amazon, work ethics are heavily questioned by the European Union. Last July, workers were on strike across Europe. They decided to stop working during the busiest moment of the year – a special sale day called “Prime Day”, online available on Amazon’s website and for 24 hours.
In Germany, Spain and France, workers have expressed their worry about extremely poor working conditions – including low pay, moral harassment and almost inexistent social benefits. More tragically, several workers have died in Amazon’s warehouses across the Continent, raising concern around their safety and how Amazon is trying to lower workers conditions in countries that are well-known to efficiently protect workers.
A very virulent French documentary showed illegal driving trainings – and while the video was largely shared across social media platforms, it has been switched off and impossible to watch online. So far, France has the strongest protecting workers law in Europe. However, Amazon workers testified that they could not have breaks and that even the smallest pauses – such as going to the bathroom – were sometimes refused by their management.
While the French authorities have not commented yet on this, the French President’s popularity has been decreasing over the months, leaving Emmanuel Macron in a tough spot.
Emmanuel Macron At His Lowest
Emmanuel Macron might have been branding himself as a modern European version of John Fitzgerald Kennedy, his reputation has been hitting new lows in the polls.
As French weekly magazine Le Point reports, more than 70 percent of the French population does not trust the President. It is a drop of four points compared to last month and a new low. while the President has completely reshuffled his government, in the hope of boosting his popularity this month, polls show that the might have affected it negatively.
With conservative new laws cutting on pensions, social benefits and an inflation on gas as well as consumer goods, Emmanuel Macron’s decisions have shrunk French middle classes’ consuming power – whom enthusiastically voted for him last year.
According to the poll conducted by Kantar-Sofres Onepoint and published in the daily newspaper Le Figaro, the French Prime Minister, Edouard Philippe stands also in a tough spot. At the moment, only 31 percent of the French population trust him. And with a very controverted new Minister appointments, it seems that Emmanuel Macron is looking for some new inspiring leaders.
Yesterday, a story on Politico suggested the French President was on the edge of a burnout and needed a few days to rest – which he is doing during this first weekend of November. “For several days, friends have been urging him to rest, eat better and sleep better, but also to stop trying to control government life in the early hours of the night,” Benjamin Griveaux, a government spokesman said, according to Europe1.
And while his reputation is at stake in his own country, the French leader strongly brands himself as a foreign leader abroad. Whether it is while meeting the American President Donald Trump or the British Prime Minister Theresa May, he excels in diplomacy where many have failed – making it his strongest asset.
Macron Tries To Be A Diplomat
Emmanuel Macron was elected at a key moment in the world’s diplomacy. While most of Europe’s leaders have been having a hard time sustaining good relationships with the United Kingdom and the United States, Macron’s Versailles – inspired art of flattery has succeeding in seducing the most challenging and opinionated current leaders.
To start with, Macron invited President Donald Trump on Bastille Day last year. While the world was making fun of the newly elected American President, Emmanuel Macron managed to make a friend; inviting him to the Elysée Palace with his wife, Melania Trump and publicizing their good friendship in front of the world’s camera.
The icing on the cake was a private dinner at Eiffel Tower’s Jules Verne restaurant, known for being one of the best gourmet places in the world.
The relation was going so well, that international media started talking about a “bromance” between the two Presidents… But, just like any leader, Emmanuel Macron was not doing this purely genuinely.
— politikos (@politikos_news) October 25, 2018
Behind closed doors, the French President had a very clear plan in mind: to make sure the American President would not change his mind on the Iranian deal. Macron’s flattering made, on the long term, no difference whatsoever: a few months after his visit, Donald Trump decided to do it his way.
— Donald J. Trump (@realDonaldTrump) November 2, 2018
On November 2nd, Donald Trump decided to reinstall Iran sanctions.
While his strategy for the Iran deal was unsuccessful, Emmanuel Macron decided to pick a new topic to show his influence: the rise of the extremes in Europe.
He wanted to warn about the risks of nationalism. A few days ago, the French President sent a strong message while on session at the European Parliament, warning countries against the rise of nationalism.
I guess Trump's bromance with Emmanuel Macron is over. https://t.co/Ivqv5uOaDX
— DragonSlayer (@eastrockpark) October 24, 2018
“Nationalism is not the answer”, he said, during an interview for French newspaper Ouest France. “In a Europe that is divided by fears, nationalist assertion and the consequences of the economic crisis, we see almost methodically the reenactment of everything that dominated the life of Europe from post-World War I to the 1929 crisis,” the French President analyzed in the interview published late Wednesday.
Indeed, for the past months, many European countries have elected members of alt-right movements and parties, shaking the foundations of an Union that was consolidated so far by pro-immigration and liberal leaders, from Angela Merkel to Emmanuel Macron.
However, a video clip yesterday published by the French government sparked a national outrage and heavily questioned the intentions of Emmanuel Macron.
Designed for social media and to reach first time voters for the 2019 European election, the video says voters have only two options for Europe’s future. In the video, set with a dramatic action movie-like score, it seems that the European elections are a referendum for either a free and inclusive Europe – either a racist and fascist continent.
While it seems that the government tried to follow Marshall McLuhan’s strategy: “The medium is the message”, all the parties, left and right, have vividly criticized the binary video. For many, this video is supporting Emmanuel Macron’s wish to become a leader – and the party “En Marche” that he founded two years ago to win the European elections.
From the French Democrats “Parti Socialiste”, to the alt-right, all have agreed that the video was “pure propaganda”. As for the public opinion, French people are starting to seriously question the President’s honesty and intentions.
At the same time and just across the Alps, France’s Italian neighbor have made a radical choice: they have elected populist leaders, in the hope of getting rid of years of corruption. Once more, France positioned itself as the referee.
An Embarrassing Italian Neighbor
As usual, words delivered by the French President in the Ouest France interview were nothing short but candid. His warning against the rise of fascism had a diplomatic purpose aimed at the new leaders of Italy.
The interview was a clear message intended to Matteo Salvini, the Italian leader of the anti-immigrant League party and also the current Interior Minister.
With a very outspoken personality and a large visibility across social media platforms, the Italian patriot – as he describes himself – shared his strategy online during a Facebook live, right after the elections.
His favorite topics: to fight against corruption in southern Italy, sharing his efforts to push back migrants from Northern Africa and expressing his love for the Italian cuisine. In other words, a very patriotic agenda that mixes tradition, racism and promises for the middle class to gain back its consuming power.
In this video, Matteo Salvini shows letters he sent to fight against corruption in Italy.
Matteo Salivini’s Facebook lives hit on average a million views. His casual vocabulary and allure – he always wears a casual shirt or a tee-shirt – have caught the attention of the country’s middle class.
His disruptive way of communicating with Italian citizens that has reached a peak of success this week. According to a story published by Reuters, Interior Minister Matteo Salvini is seen as the real leader of the government. He has managed to take care of his publicity through new ways of communication.
The poll, managed by the Italian daily newspaper La Repubblica, showed that 58 percent of Italians considered Matteo Salvini as the country’s leader, while only 16 percent chose the current Prime Minister Conte. Last but not least, 14 percent chose Luigi Di Maio, who heads the alt-right Five-Star Movement.
Salvini and Di Maio are deputy prime ministers in Conte’s coalition government, which took office last June and which the Demos poll found that 58 percent of respondents support.
Matteo Salvini is famously known for supporting immigrants deportations. “We need to keep these desperate people in their countries of origin through an economic collaboration that blocks their departure”, he said, while visiting Sicily and calling Tunisian illegal immigrants “criminals”.
It seems that Matteo Salvini anti-immigration policy is taking a new step this week. On Friday November 2nd, the Italian press agency ANSA reported that a “Catania prosecutor asked to shelve a case of alleged kidnapping by Interior Minister Matteo Salvini of rescued migrants aboard the Diciotti Coast Guard ship”. Salvini replied on a Facebook live that he is “innocent. I could and had to block the immigrants”.
Other countries are also tempted by the extremes. Germany is one of them, as its political landscape has made an alt-right shift since last year’s Parliament elections.
Germany Makes A Right Shift, Too
It might be the biggest surprise of the year for European political analysts. Merkel’s Germany has been showing the strongest economy and the highest stability in the Union after the 2008 financial crisis.
However, the Parliament Elections last year and the regional election a few weeks ago have shown a growing interest for the AfD, Alternative for Germany, the far right party in the country.
Exit Polls from #Hesse regional election showed Merkel’s #CDU at 28%, the party’s worst showing in region since 1966. Left wing Green party doubled votes to 19.5%. #AfD made gains entering Hesse’s parliament for the 1st time on 12%. Issues concerned Terrorism, Immigration & Crime pic.twitter.com/jsGyCgIPDB
— Intelligence Fusion (@IntellFusion) October 28, 2018
Last week, the regional elections results in the State of Hesse shook the country as AfD entered the Parliament of the State for the first time with 12%.
Pro-immigration policy of Merkel for the past years have created tension across the country, as the media have increasingly reported cases of rapes and robberies cases perpetrated by Middle Eastern immigrants.
From this week’s gang rape in Freiburg – according to the media, perpetuated by Afghans to Cologne New Year’s mass sexual assaults three years ago – where a lot of migrants were involved, those horrendous events only grew anger towards new immigrants in the country.
So, how is Germany planning to collaborate with France in the midst of the Brexit era, while the far right is dramatically growing? According to the Financial Times, it seems that France and Ireland might take German’s spot.
While Germany has been having a strong economy for the past ten years, it has done a poor seduction operation towards banks settled in the United Kingdom and will less benefit from the Brexit. As a result, other European countries might become stronger economically.
At the moment, American bank Goldman Sachs has already transferred 60 percent of its investment and finance departments to Milan, Frankfurt and Paris.
Next summer, Bank of America will transfer its headquarter in Dublin and will open a new Paris office that with more than 400 employees. As for now, London is predicted to lose about 5,000 financial jobs in March 2019.
As experts confirmed in the FT, Germany is also not a good choice for expatriate workers themselves. As a matter of fact, the country has no additional expatriate or travel deductions, compared to France and Italy.
While those European countries are predicted to become the biggest post-Brexit winners of high-paid jobs, middle classes of these same territories, including France struggle to sustain their cost of living.
As unemployment is rising in France despite Emmanuel Macron’s electoral promise to lower it, hundreds of French middle class workers have decided to leave the country, in the hope of a better life.
“French Flee To Hungary”
Some European countries from the former Soviet Union are taking advantage of this situation and have managed to transform this gloom reality into an opportunity to attract lower Western middle class workers, more skilled than the local ones. Their goal is, on the mid-term, to boost their GDP.
Hungary is one of these territories. Since Emmanuel Macron’s election, Viktor Orbán, the Hungarian Prime Minister, has been inviting French citizens to settle in his country. He has mainly been targeting Marine Le Pen’s supporters, who are nostalgic of a “white and christian” Europe.
After a year, it seems that Orbán’s strong preferences for tradition and family-focused communities have succeeded: several hundreds of French citizens have moved to Hungary.
The natural French are moving to Hungary, this is proof Globalist Fascism is being rejected. The EU wont stop till the Europeans are wiped out. So the French are moving taking their assets to a country that cares.https://t.co/9xm3F6eqCL
— DAVID.G (@DCG1A) October 27, 2018
To some, French citizens leave their country because of its government’s neglect
Currently, the biggest expatriate community in Hungry is the francophile one: Belgian and French citizens, looking for a stable economy and a country where the middle class still exist.
French middle class workers are not promised tremendous jobs in Hungary, nor free language classes; but they do have the opportunity to buy a house and some land. Something they cannot afford anymore in France or in Belgium.
The average price of an apartment in Budapest for a family costs about £50,000, a quarter of the price of what would cost an apartment in a small city in France – and almost 75 percent off what would cost a one bedroom in Paris. At this price, French middle class workers are massively settling in Hungary.
This internal Eurozone migration movement has been so important lately that the public French television channel dedicated a special show to this new type of migration – interviewing French-speaking Belgian expatriates as well.
While experts consider that this proportion of the population as very small, alt-right movements, like Marine le Pen’s Rassemblement National, are using those statistics to convince the French middle class voters that Macron’s liberal economy is bad for most of the French people.
In a recent interview, Victor Orbán shared Le Pen’s opinion, explaining that: “We do not want a European Union under French leadership… The Europeans must be heard and we must wait for the European elections before taking some important decisions”.
There is a lot to bet that Marine le Pen and Victor Orbán will collaborate for the European elections next year, in order to win more alt-right seats.
While Donald Trump’s former campaign strategy chief Steve Bannon positions himself as the conductor of an alt-right European movement and has been touring for the past year in each and every country of the Union, a new alliance of alt-right parties is shaking Europe to its core.
But a historical milestone might stop – or at least, slow down – this new movement. In a week, the hundredth anniversary of the end of WWI on November 11th seems like a one-time opportunity for pro-Europeans, just like Emmanuel Macron, to show how strong the Union European stands together.
A Historical Milestone
100 years after the United States and the Western world fought against Germany and its allies, Emmanuel Macron has managed, once more, to use France’s historical heritage in order to gather the biggest world’s leaders in Paris this month.
While Donald Trump has declared that his country would withdraw from the Iranian nuclear deal, Russia’s Vladimir Putin will meet with the American President in Pari. The Russian leader should try to convince Donald Trump to stay in.
On November 11th, Emmanuel Macron will shortly unify not only a fragmented Europe, but a fragmented world. Russian acquaintances of Vladimir Putin have shared in local newspaper they fear a war.
The armistice’s centennial might also be an opportunity for the “strength and closeness” with Europe for the United Kingdom, as the Guardian reports.
While Prime Minister Theresa May’s grandfather fought in the Somme, a commemoration will take place in northern France. Emmanuel Macron and the German President Frank-Walter Steinmeier will also attend the event.
Emmanuel Macron was born in Amiens, a city that is very close to the location of next week’s ceremony. The public opinion is expecting him to publicize this in order to highlight May’s and Macron’s personal attachement to the region.
In total, the French President will spend a five-day remembrance journey in the countryside and in Paris, where he will meet and greet with all the world’s leaders.
Experts think that the French President will use his diplomatic skills to get countries closer, in order to ultimately convince Theresa May to implement a soft Brexit deal. But the opposition is skeptical.
After all, next week seems like a new opportunity for France to show its influence. It is only a matter of days before the public opinion sees if Emmanuel Macron can really become Europe’s leader.
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