France and Germany have sought to put their differences aside and seek a common approach to getting the Eurozone’s weakening economy back on track.
Germany and France agreed that more investment was paramount to growth in the Eurozone and said they would submit proposals by early December on how to boost the 18-member bloc’s economy.
But it was unclear whether the Eurozone’s two economic heavyweights had sorted out their differences over who should be doing that investing.
Both nations’ finance and economy ministers convened in Berlin to discuss shoring up France’s budget deficit and spurring the German government to invest more in the country’s decrepit infrastructure.
As Europe’s largest economy, Germany has come under pressure from the International Monetary Fund (IMF), among others, to increase private and public investment to help prevent stagnation in the Eurozone.
Paris has been grappling with high unemployment and low growth, which has prevented it from reining in public spending. Last week, the French government submitted a budget proposal to the European Commission that foresaw a deficit of 4.4 percent of gross domestic product (GDP) this year and 4.3 percent next year. The EU limit is 3 percent of GDP.
France does not expect to comply with EU budget deficit rules until 2017.
While French Finance Minister Michel Sapin underscored after the meeting the importance of the EU’s budget rules, he reaffirmed that France would reduce its deficit “in harmony with the needs of the French economy.”
Save 50, Spend 50
Before the meeting, French Economy Minister Emmanuel Macron irked his conservative German counterpart, Wolfgang Schauble, by suggesting to a German newspaper that France would be willing to slash fiscal spending by 50 billion euros if Germany was ready to pick up the slack by investing the same amount.
“Fifty billion euros ($64 billion) savings for us and 50 billion of additional investment for you - that would be a good balance,” he was quoted in the Frankfurter Allgemeine Zeitung as saying.
But Macron quickly backed off and later told reporters that he had never asked for a German investment program.
Schauble, who has opposed any big investment drive in favor of balancing the federal state budget for the first time since 1969, did admit that the Eurozone economy was weakening.
“So we are determined to do everything together so that we strengthen investment in our countries,” he said.
