Amaury Allard

Americans, here's some context on why this is a big deal in London right now. Rachel Reeves was Britain's finance minister until very recently. She helped write the Labour manifesto that won the 2024 election, and that manifesto said no return to the EU. Now that she's out of the Treasury, she writes in The Sunday Times that Britain's future lies inside the European Union. She's making the case at Harvard on Monday, which tells you who she thinks the audience is. As a French guy I find the whole thing a bit funny, because we've been here before. In 1963 Charles de Gaulle vetoed Britain's application to join the European club. He did it again in 1967. He thought the British were too close to Washington and would never really commit to Europe. Britain only got in in 1973, once he was gone. Then in 1984 Thatcher got her famous rebate, negotiated at Fontainebleau of all places. Later the UK kept the pound and stayed out of Schengen. Britain was always the member with one foot out the door, so in 2016 it finally walked through it. Here's the part people skip in the rejoin debate. If Britain applies again, it applies like any new country, and nobody in Brussels should be expected to hand the old special deals back. Every member state gets a veto on a new entry, France included. So the British would be asking Paris for permission one more time. Does that mean it won't happen? Not necessarily. Prime Minister Andy Burnham says any big change would need an election mandate, and that's years away. In the meantime the realistic menu is much smaller, like a youth mobility deal and maybe joining the EU defence loan program called SAFE. What I'd watch is the UK EU summit later this month. If they get youth mobility done, the rejoin crowd will call it step one. If they don't, this column will read like what former ministers usually write once they no longer have to vote on anything. Curious how this looks from the US. Does anyone over there notice when Britain changes its mind about Europe, or is it background noise at this point?

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I often see "France: Now and Then" videos. Old Paris boulevards, then burning buildings. Some context from a Parisian guy, since 90 seconds doesn't give you much. The recent riots started with students protesting about teacher shortages and schools falling apart. Bad, sure, but not exactly the fall of Rome. Also Paris has always rioted. 1830, 1848, the Commune in 1871, May 68. The big Haussmann boulevards in the "then" footage were partly built so the army could get past the barricades faster. And France is super centralized. If your school is falling apart you don't email the school board, you go protest in front of the ministry. France has real problems (debt, public services, politics is a mess). But using it as the go-to example of decline is a bit lazy imo

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France now pays more to borrow than the United States. On Wednesday, the French 10 year bond yield hit 5.07%. The US 10 year Treasury sat at 5.04%. The last time that happened was 2013. For Americans, think of it like a credit score. The interest rate a country pays tells you how much investors trust it to pay them back. Markets are now saying Paris is a bigger risk than Washington. And the US runs deficits of 6% of GDP with a $38 trillion debt. The more telling number is Germany. France and Germany share the same currency and the same central bank. So the gap between their borrowing costs is pure French risk. That gap is now the widest since the 2011 euro crisis, when Greece was collapsing. How did the second largest economy in Europe get here? France spends around 57% of its GDP through the state, one of the highest levels in the developed world. It hasn't balanced a budget since 1974. Debt is above 115% of GDP. Interest payments are on track to become one of the biggest lines in the budget, ahead of defense and close to education. Then add politics. Parliament has been split into three blocs since 2024. Nobody has a majority. Governments fall one after another. Every attempt to cut spending triggers a revolt. The government is now trying to pass a budget with a 5% deficit target. Even that modest goal is stuck. Protests and riots are already in the streets. Meanwhile, the 2027 presidential campaign is warming up. And the promises are about spending more, not less. That is the French paradox. The country has world class companies, top engineers, great infrastructure and a famously productive workforce. But its political system can't say no to new spending, and its voters punish anyone who tries. The bond market is the one voter nobody can ignore. Foreign investors hold nearly 58% of French debt. When they ask for higher rates, there's no referendum. France won't become Greece. It's too big, too rich, and the European Central Bank has tools to step in. But those tools come with conditions. And conditions mean Brussels and Frankfurt writing parts of the French budget. For a country as proud of its sovereignty as France, that might be the real wake up call.

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Britain finally wants a Norway style oil fund. 🇬🇧🇳🇴 There is a particular kind of wisdom that only arrives once there is nothing left to be wise about. Britain has just discovered it. The Chancellor, John Healey, announces a North Sea Energy Wealth Fund. One must admire the courage it takes to lock the stable door with such ceremony, so many years after the horse has bolted, grown old, and been quietly buried somewhere off the coast of Aberdeen. Norway and Britain found oil beneath the same grey sea, at almost the same moment, like two brothers inheriting the same fortune. The younger one, more modest, put his share in a drawer and forgot about it on purpose. He made his first deposit in 1996. Today the drawer holds well over $1.5 trillion, and through it Norway owns a small piece of nearly every listed company in Europe. The elder brother, more elegant and more in a hurry, spent his. Around £400bn between 1975 and 2022, in today's money. Tax cuts, mostly, and the cost of closing the mines and the mills, which is to say the cost of the very people the oil might have protected. IPPR once calculated that a British fund started in the 1980s would have been worth over £500bn by 2018. A beautiful number. The kind one only gets to read in obituaries. Now Britain wants to save, with roughly 90% of its reserves already burnt, production slipping year after year, and a 78% effective tax rate falling on a field that grows smaller every time someone looks at it. It is the gesture of a man who starts a pension at eighty, sincerely, with great dignity, and without much hope. And of course the old dilemma returns. To fill the fund one must drill, and to drill one must betray the promises made to the climate. Either the fund remains a poem, or ministers must explain why more oil is the price of virtue. Meanwhile Edinburgh, which has always suspected that the sea belonged a little more to Scotland, already asks that the money stay in the North East. The fund does not yet exist, and already it has heirs quarrelling over it. Norway's secret was never oil. Everyone had oil. Its secret was patience, a rule kept for decades by people who agreed on almost nothing else. That is the one resource the North Sea never gave Britain, and the only one it could still have produced at home.

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A former British prime minister went to Dublin this weekend to tell Europeans that America won't keep paying for their defense, and people reacted like it was breaking news. Honestly, as a French guy, I find it a bit funny. Americans have been giving Europe some version of this speech since 1951. That year Eisenhower was running the brand new NATO command in Europe. He wrote that if American troops stationed in Europe hadn't gone home within ten years, the whole project would have failed. That was 75 years ago. The troops are still there, and Europe got very comfortable with the arrangement. Here's the part most Americans never hear about. Europe actually tried to build its own army once. In 1950 France proposed a European Defence Community, one joint army with West Germany, Italy, Belgium, the Netherlands and Luxembourg. Everybody signed in 1952. Then in 1954 the French parliament voted it down. So the country that talks the most about European defense is the one that killed it in the crib. After that France just did its own thing. De Gaulle built the atomic bomb, pulled France out of NATO's integrated command in 1966 and asked the American bases to leave. Paris only came fully back in 2009. Macron called NATO brain dead in 2019 and half of Europe was furious with him. Britain played the opposite part for decades. London was Washington's closest friend in Europe and very suspicious of anything that looked like a European army outside NATO. So when Starmer now asks for a common European security framework with Britain at the center, that's a pretty big turn. And he's saying it from a country that left the EU, which is a strange spot to lead Europe from. What changed is Russia and money. For years most European countries spent less than 2% of GDP on defense and let the US carry the bill. Starmer says this shift is permanent and I think he's right. Washington has been asking for it since Eisenhower, under presidents of both parties. My slightly contrarian take is that the money is the easy part. Europe is rich, it can find the cash. What it has never settled is who gives the orders when things get serious. Paris assumes it should obviously be Paris, Berlin gets nervous at the very idea of leading anything with tanks, and now London seems to want the job too. The Americans solved that question in 1949 simply by being in charge. So Europe will spend more, fine. Whether it can act together without an American in the room is something it has been dodging for 75 years.

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