Written by 6:49 am Europe Economy

Europe Can’t Go Into Winter Thinking All Is Lost


Europe is getting back to business after its summer break — but this year feels like jumping into a cold shower. Just listen to Emmanuel Macron. The French President told his ministers during their first formal gathering last week that a new paradigm is on the horizon — it’s the end of abundance in a care-free world. 

That’s a sobering statement coming out of the country of opulence itself. French history is shaped by splendor; its national ethos pursues grandiosity in the values it represents and the role of puissance d’équilibre — a power of mediation — it seeks to play on the international scene. Luxury is also a veritable moneymaker for the French economy — the industry feeds on insatiable consumer demand. 

All of this contrasts with Macron’s statements, which critics have called crude, pessimistic, even defeatist. Yet, although the message wasn’t the most palatable, it was an important one. The truth is, Macron’s words are merely catching up to the reality of what Europe faces. Russia is wreaking havoc on the energy market, inflation is rampant and governments are actively seeking demand destruction to avoid rationing. The opposite of abundance is scarcity. The flip-side to opulence is sobriety. Why sugarcoat things? 

The French president has a habit of shaking public opinion with shock statements. He once described NATO as brain dead and  suggested he would gladly emmerder (“piss off”) non-vaccinated people if that helped push up the vaccination rate in France. His tone and language are often divisive. The political left has already 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 modest salaries. Marine le Pen, his political nemesis, said the crisis scenario he laid out isn’t just the result of the war, but also of his policies. 

Some of Macron’s ministers rushed to clarify his comments hours later, suggesting the president isn’t defeatist but lucid. It was an exercise in damage control, but the tone had been set. Much of the ensuing TV commentary was spent debating what sacrifices will be demanded of the public. In that sense, Macron’s language contrasts with that of Joe Biden’s administration, which is reluctant to fuel recession talk, and even of the UK’s Liz Truss, frontrunner for Tory party leader, who refuses to believe a recession is inevitable despite the fact that the Bank of England predicts one. And the UK arguably faces a much bleaker picture than France. 

In 1979, former US President Jimmy Carter pronounced what some described as the pinnacle of pessimism in politics. Against a background of inflation and pain at the gas pump, he argued that America was going through a “crisis of confidence” — in the future and 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 relevant today. Much will be decided by the bloc’s resolve to stay united, have confidence and determination.

I’ve long argued that many Europeans are still in denial about how a severe winter could hobble the economy. For households and businesses, it could force draconian choices: Buy fuel or buy good, stay open or close shop. Still, a reality check doesn’t mean fatalism.

For Macron, who already went through a traumatic period of social unrest with the yellow vest protests in 2018, fatalism risks undermining his own government. The French have capped energy prices, absorbing much of the pain through the state-owned utility Électricité 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 euro area. In that sense, Macron is buying social peace, just like he did with his “whatever the cost” stimulus during the pandemic lockdowns. The government shouldn’t sound like it’s 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 both gas and forward electricity prices are pushing fresh highs almost weekly, the EU so far has signaled it won’t reverse course. Even Macron himself recently suggested there was no room for compromising with Vladimir Putin under the current circumstances. Ultimately, he argued, this is battle of values too.

That’s encouraging, but maintaining morale will get harder as the days get colder, especially if we’re told everything is doomed from the get-go. For Ukrainians, who are paying a heavy price in blood and destruction, that is a disservice.

Macron also talked about a series of crises, going from the war to climate-related events to supply-chain issues. These are important issues but such blending can confuse public opinion and dilute Putin’s responsibility for the current situation — had he not invaded Ukraine, we wouldn’t be talking about an energy crisis of this magnitude.

Europe is entering uncharted waters this winter. We must stay lucid about the risks, but let’s not go into the storm assuming all is lost already.

More From Bloomberg Opinion:

• Listening to European Electricity Traders Is Very, Very Scary: Javier Blas

• Next, the Supreme Court Decides How to Punish US Expats: Andreas Kluth

• Don’t Try to Guess Putin’s Next Move. Just Listen: Maria Tadeo

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

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

More stories like this are available on bloomberg.com/opinion

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