Europe and France’s new president: Will Macron make the Erasmus generation dream come true?

17 May 2017 – Bloomberg View (New York City)

If anyone can restore faith in the vision of a federalist Europe, it's France's new president. But it will not be that easy, warns Ferdinando Giugliano.

A year and a half ago, together with another dozen or so reporters, I attended a lunch at the residence of the French ambassador in London. The guest speaker was Emmanuel Macron, then France’s economy minister, who had crossed the Channel to promote his country as an investment destination for banks and high-tech companies.

What struck me most about the man who on 7 May became France's youngest-ever president wasn't so much his unbounded ambition or wonkish attention to detail. It was his unashamed Europhilia, which a year later would become one of the defining traits of his presidential bid.

At a time of rising resentment against Brussels, Macron comes across as a time traveler from the pre-crisis era. At 39, he’s the most prominent symbol of the "Erasmus generation" — named after the European Union’s flagship university-exchange program, which allows students to spend a year in another EU country. Now in their 30s and 40s, these well-educated young professionals have seen their careers and social lives flourish thanks to open borders. Many of them have clung to federalist dreams, hoping that one day the EU will look more like a United States of Europe.

Now that he holds his country’s highest office, Macron has an opportunity to make that generation's dream come true. He faces two main obstacles: The first is to convince Germany to accept the consequences of greater eurozone integration. The second is to halt the tide of euro-skepticism, which is making inroads among the same youth who used to view the EU with enthusiasm. These are steep challenges.

However, if anyone who can overcome them, it’s Macron. He envisions the euro zone as an integrated fiscal union, with a finance minister who manages a common budget and is accountable to the European parliament. This idea — which many economists agree is necessary for the currency union to survive — has met with fierce opposition from Germany. Leaders in Berlin fear that weaker member states will use money from German taxpayers to fund higher spending instead of seeking to improve their competitiveness. While German Chancellor Angela Merkel congratulated Macron on his victory, she also made clear she had no intention of loosening the euro zone's strict fiscal rules.

Fortunately, Macron understands that a transfer union in which stronger states support weaker ones must be based on compromise. "You cannot say I am for a strong Europe but over my dead body for a transfer union … or reforming my country," he told us at that London lunch. His reasonableness poses a dramatic contrast to other European leaders who’ve vowed to reform the EU. Matteo Renzi, Italy's former prime minister, has resisted greater oversight from Brussels over national budgets, while asking for greater budget "flexibility" to increase current spending — hardly a way to get the Germans on board.

The other test facing France's new president will be convincing Europe's youth that the dream of the Erasmus generation is worth pursuing. Macron won by a margin of 2-to-1 in the second round of the presidential election, achieving a majority in every single age group. However, Marine Le Pen, his Euroskeptic opponent, did much better among younger and middle-aged voters. One decisive factor appears to have been frustration among young voters over the lack of well-paid jobs. The same anger has boosted other populist parties in Europe, starting with the Five Star Movement in Italy, where youth unemployment stands at over 35 percent.

Macron may have arrived at just the right moment. The euro-zone economy is enjoying a mild recovery, which could gain momentum now that investors can stop worrying about the risk of a euro-skeptic president at the Elysee Palace. As economic growth strengthens, youth unemployment should fall, which should in turn boost support for the EU.

Of course, there are plenty of reasons to worry whether Macron can achieve even a small part of his ambitious program. He may fail to win a majority at next month's legislative elections, which would hamper his push for reforms at home. Germany may stubbornly refuse to play ball. A new economic crisis in a country such as Italy could bring the recovery to a sudden stop.

However, if there ever was a moment to feel hopeful for the euro-zone, this is it. The Erasmus generation looks to have come of age.

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