Germans look set to reject François Hollande's growth demands
Germany’s finance ministry has released a discussion paper examining options to boost growth within eurozone countries and those favoured by French president François Hollande are given short shrift.
French centre-left newspaper Le Monde’s Friday edition dubs the document an “economics lesson for the European Left” and notes that Berlin looks set to reject Hollande’s demands for Europe-wide measures to stimulate growth.
“The responsibility for promoting sustainable growth rests primarily with the member states” says the German document.
It has been drawn up ahead of a meeting with German opposition parties including the Social Democrats and the Greens, both parties who say they favour more emphasis on growth to be included in the fiscal pact, up for ratification in Germany shortly.
Typical liberal economic measures such as labour market reforms and privatisation programmes are praised in the document, and private investment is seen as a better way of funding infrastructure projects than public financing.
French president Françis Hollande is pushing four key ideas to emphasise growth.
He wants access to European Structural funds for infrastructure projects, an idea which was already being considered within the EU. He also wants an increase in the capital of the European Investment Bank - Berlin appears ready to countenance a small increase. On the creation of European project bonds, the paper suggests trying out a limited version of the idea.
There is no mention in the discussion paper of the financial transaction tax favoured by Hollande and former French president Nicolas Sarkozy.
However, even as the different parties in France and Germany argue over emphasis and details in the fiscal pact, there is agreement that it is not enough to stem the economic turmoil in the eurozone.
In a short joint news conference after talks in Berlin, German Chancellor Angela Merkel and British Prime Minister David Cameron said that the pact to toughen budgetary discipline in the EU was “necessary but not the only pre-condition” to solve the crisis.
In a separate interview earlier on German public television on Thursday, Angela Merkel advocated greater political union within Europe, saying “We must, step by step, cede responsibilities to Europe”. She went on to say that if necessary a two-speed Europe would emerge, but that certain countries could not prevent others from advancing together.
The current focus of the debt crisis is the Spanish banking sector. There have been calls to allow lenders to tap the EU’s bailout funds directly, enabling Madrid to escape going cap in hand to Brussels, but Germany insists the rules of the bailout fund should be respected.