we start in france where, as you've been hearing, the government has collapsed after a no—confidence vote in the prime minister, michel barnier. the move leaves france facing months of turmoil — plunging the european unions second biggest economy into a political and financial crisis. (mix scr y)0pposition parties called the vote after mr barnier used special powers to push through a budget without a vote. that budget — that is now null and void — sought to deliver some 60 billion euros in tax rises and spending cuts. money he argued is needed to restore france's spiralling budget deficit. a deficit that is predicted to rise to around 6% of france's total economic output this year. almost double the eu's target of 3% which is designed to ensure member states pursue

"sound public finances". joining me from paris is leo barincou — senior economist at oxford economics. good morning. in france this morning. _ good morning. in france this morning, everyone _ good morning. in france this morning, everyone is - good morning. in france this morning, everyone is waking i good morning. in france this i morning, everyone is waking up to the news that there was a no—confidence vote that michel barnier — the prime minister — has got to go. give us your take on what might happen next in the coming days and weeks. well, the next steps now is for macron to find a new prime minister that he will task to nominate a new government. the main order of the day for the new government will be to try to pass a new budget to have a budget for 2025. it will probably be too late — so, france will have to start the year without a budget. so, the

2024 budget will be extended into 2025, unless the new government can pass — hopefully — a new budget. but government can pass - hopefully - a new budget-— government can pass - hopefully - a new budget. but the problem with parliament _ - a new budget. but the problem with parliament currently - - a new budget. but the problem with parliament currently is - with parliament currently is that it's split and divided three ways. and getting agreement on a budget is going to be notoriously difficult, as michel barnier has discovered? yes, exactly. yes. ithink it was the first time since 1962 that actually the french parliament toppled the government. but we probably won't have to wait another 62 years to see it happen again. in fact, the next government is likely to be just as weak as barnier�*s government because, really, it is impossible to find a stable majority with the current majority — it's currently impossible. so the next government will maybe fall very quickly too, and will have a hard time passing a budget for sure. , , for sure. the president is coin: for sure. the president is going to _ for sure. the president is going to address - for sure. the president is going to address the - for sure. the president is l going to address the nation

later tonight on television. i think president emmanuel macron wants to try and portray himself as the calm in the storm, but many are calling for his resignation? yes storm, but many are calling for his resignation?— his resignation? yes - well, i think macron's _ his resignation? yes - well, i think macron's resignation i think macron's resignation remains somewhat of an outlier scenario. it's something that he has clearly excluded for now, but clearly pressure on him to resign will intensify in the months to come. if france can approve the government with the current national assembly — because there cannot be new legislative elections until july 2025. if governments keep falling like barnier�*s did, pressure on macron will clearly increase. , , , ., increase. just briefly, leo - the impact _ increase. just briefly, leo - the impact this _ increase. just briefly, leo - the impact this will - increase. just briefly, leo - the impact this will have i increase. just briefly, leo - the impact this will have on the impact this will have on the french economy in the short—term? the french economy in the short-term?— the french economy in the short-term? ~ ., short-term? well, i would say in the very _ short-term? well, i would say in the very short-term, - short-term? well, i would say in the very short-term, the i in the very short—term, the main issue with the french economy, of course, is public finances. growth has been somewhat resilient for now, and should remain so next year. the

main issue — aside from where the size of the deficit and public debt. in the short—term, we are cautiously optimistic. i should say that there shouldn't be too much trouble. the fall of the government was something that was expected by the market. maybe the spread between french and german government loans will widen a bit. but it should stay pretty stable for us now. really, it's the medium—term that it's hard to see a way that france can find the money needed to reduce its deficit and to stabilise its deficit and to stabilise its debt.- we - its deficit and to stabilise its debt. fik. we need — yes. its debt. ok. we need - yes. leo, its debt. ok. we need - yes. leo. thank— its debt. ok. we need - yes. leo, thank you _ its debt. ok. we need - yes. leo, thank you for _ its debt. ok. we need — yes. leo, thank you for your thoughts and analysis. of course, something we're keeping a very close eye on. so within the european union, its two biggest economies are in crisis. france has taken centrestage this week, but germany is also facing snap elections early in the new year. in both countries, top

politicians cannot agree on how to turn around their flagging economies. this, as a new trump presidency in the us poses fresh economic challenges for europe. and this might explain why ursula von der leyen�*s enthusiasm to clinch a long—delayed trade deal with a group of south american nations. the european commission president is in uraguay for talks on the so—called eu—mercosur deal. dr arantza gomez arana is from the university of northumbria and has written a book on the deal. more than qualified to tell us what this is all about. remind our viewers what this deal presents for both europe and the south american nations. good morning. thank you for having me. this agreement, economically, will benefit both regions. on the mercosur side, it will help to trade in a cheaper manner in relation to

the trade between european union countries will allow the export of something along the lines of 99 tonnes of beef starting at 7.5%. in relation to poultry, around 180,000 tonnes will enter the european union duty—free. on the european union side, the main benefits will go to countries like germany because they will be able to export 2 south american countries carts and parts of carts to new countries without the tariff which is quite high. for pharmaceuticals, they will be allowed to export products with, again, reduced tariffs. so you can see why, for europe, they are keen on this trade deal — especially when trade

relations with the us might become that much more fractious next year. however, france is not happy about this at all — president emmanuel macron is saying it's not good for european farmers. there are other key players within europe who are not happy about this deal. and also, in mercosur, argentina's javier milei is threatening to veto it as well. do you think we will get a deal? ~ ., do you think we will get a deal? ~ . , ., ., deal? we have been waiting for this deal for _ deal? we have been waiting for this deal for 25 _ deal? we have been waiting for this deal for 25 years. - deal? we have been waiting for this deal for 25 years. so i i deal? we have been waiting for this deal for 25 years. so i am | this dealfor 25 years. so i am cautious. but i am optimistic, in particular, because — as you just mentioned yourself — von der leyen, the president of the european commission — is on her way, so that is a good sign that the deal will be done in uruguay. in relation to argentina's presidentjavier milei, it is expected, to some

extent, that he will help with this agreement. however, he has made very clear that, if this agreement does not happen this time, he might either leave mercosur or, as for the —— or ask for a change of rules so argentina can develop trade agreements with the united states and with china. fik. agreements with the united states and with china. 0k. all riuht. states and with china. 0k. all right- we _ states and with china. 0k. all right. we will _ states and with china. 0k. all right. we will keep _ states and with china. 0k. all right. we will keep an - states and with china. 0k. all right. we will keep an eye i states and with china. 0k. all right. we will keep an eye on| right. we will keep an eye on how things progress in the next few days. thank you for your thoughts. few days. thank you for your thoughts-_ 0pec+ is opec+ is meeting today to decide on production policy for the new year. the group does include saudi arabia and russia, and they're expecting to extend current policy of holding back around 6 million barrels of oil a day from the market in an effort to boost prices — all against the backdrop of conflict in the middle east and the incoming trump presidency. ashley is

director and researcher at investment bank panmure liberum. good to talk to you this morning. what do you think opec+ will announce? this morning. what do you think 0pec+ will announce?— opec+ will announce? good morning- — 0pec+ will announce? good morning- i _ 0pec+ will announce? good morning. ithink— opec+ will announce? good morning. i think the - opec+ will announce? good morning. i think the generalj morning. i think the general expectation is that the group will roll over their current quota levels for probably three months through to the end of month. but there is some talk that they will roll it forward until the middle of the year. the biggest issue for them at the moment is that the uae has been promised that they'll be allowed to increase production by 300,000 barrels a day from january. and the uae have indicated that this is something that they want to do, irrespective of whether the wider group increases production or not. so this is going to be a sticking point for the group. but it's also, i

think, got to be framed against the incoming president—elect. and i think the stance of what he will do around iran — certainly there is a belief that he will be much more hawkish on iran and will actually enforce sanctions, which president biden didn't do, as he was very keen on trying to keep price the price at the petrol pumps down, because that's a particularly sensitive point for us voters. however, the central issue is that it looks like there'll be plenty of oversupply next year in the markets, with the iea predicting that there'll be more than 1 predicting that there'll be more than1 million barrels predicting that there'll be more than 1 million barrels a day of oversupply. if the sanctions on iran are enforced, that could move around 800,000 barrels a day, which would pretty much bring the market closer to balance. if that's

the case, then opec may look to unwind production. so i think it's more likely that they will look to extend probably to march — i thinkjune is probably too far at the moment. 0k. probably too far at the moment. ok. just briefly — give me your take on what you're hearing about relations within opec+? they were supposed to meet sunday. they delayed their meeting saying people's diaries couldn't align. there's been rumours there's more to it than that — that this opec+ cartel — they're just not getting on. if you look at the price of oil today — brent crude trading at us$72.32 a barrel. no matter what they do, they can't rise the prices, and as you say, there's going to be massive oversupply anyway.- there's going to be massive oversupply anyway. yes, the cartel is quite _ oversupply anyway. yes, the cartel is quite fractured. i cartel is quite fractured. obviously we saw angola leave last year. brazil are coming in

their place, but certainly i think the point that the uae — who is a close ally of the saudis — are insisting that they're saudis — are insisting that they�* re allowed to saudis — are insisting that they're allowed to increase production shows that there is no harmony within the cartel members. i think the issue is whether opec wants to protect market share or prices. i think they'll look to try and protect pricing, mainly because their physical break—even for most of the states is so high. certainly us$10 or us$20 around above the current price, in fact, probably about us$100 above break—even. pall fact, probably about us$100 above break-even.— above break-even. all right. thank yon _ around the world and across the uk, you're 1519 00:12:55,968 --> 00:1