Monday, October 20, 2014

Debate on higher government spending: France as supplicants in Berlin – Neue Zürcher Zeitung

Debate on higher government spending: France as supplicants in Berlin – Neue Zürcher Zeitung

France is on the defensive. The country has a competition problem, and its national debt is almost as high as the annual economic output. Also in Germany, the economy may indeed have cooled, but the unemployment rate is 5% half as high as in France. In addition, Berlin wants to do next year for the first time since 1969 no new debt. That would be a strong signal. The French, however, it would see better, if Germany was spending more money. So France’s Economy Minister Emmanuel Macron and Finance Minister Michel Sapin ahead of the visit had advertised for Monday in Berlin that Germany also invested more in the next three years, € 50 billion.

To strive saving face

The idea: If France «save» € 50 billion over the same period is, it would be only fair if Germany this fall in demand almost compensated. Of course, the French Minister did not want to be understood as ‘claim’ their proposal after consultations with their German colleagues. And the German Economics Minister Sigmar Gabriel said that they had not given each other advice.

Macron made to the press but clearly that, in contrast to France, he sees an appropriate financial resources in Germany. The German Finance Minister Wolfgang Schaeuble called the French foray, however politely as “excitation”. This is but a chance, because Germany knew only too well the importance of sound public finances are in uncertain times. And Germany is still not the end: The debt ratio is 75%, considerably higher than the Maastricht limit of 60%

The German side tried indeed to saving face for Paris, but it managed more poorly than. pretty. Gabriel explained that according to the OECD, the investment rate in Germany amounts to 17% of economic output. The organization recommending the country a quota of 20%. This would be seen over three years just about the € 50 billion correspond to call France, Gabriel said. Schäuble added, however, that Germany, the social market economy feel obliged, in the non-governmental, but private investment played the main role. While it is in principle agree with the thrust of the OECD, but can not accurately directing a numerical target investments. One must understand such remarks as swipe to Paris, which always thinks in state terms when it comes to business.

Even Berlin has reform deficit

Everyone should do what he for really think that also help the other – on this formula, the Quartet agreed finally to Berlin. Translated this means: It is agreed that you are in disagreement. And as usual in such cases, is given to a group of experts to cover up the gap. Technocrats from both countries are therefore developing proposals for investment projects to early December, and how they should be financed and the sectors in which they are to settle. Though

Macron and Sapin granted in Berlin that their country had become more competitive , and referred it to the labor market. But to comprehensive reforms – keyword: 35-hour week – it has not been able to wrestle. But Germany is resting on his laurels for a long time. Because the country’s Euro-group chief Jeroen Dijsselbloem recalled recently. He has played on the Hartz laws, which Germany had implemented ten years ago and are one reason for the good situation on the labor market.

The quartet would offer in any case a broad field that across the EU -Economy heal. Thus, Bundesbank President Jens Weidmann advocated last week in Riga, to finally complete the internal market in services. This is about the implementation of the country of origin principle

For shear could also provide more free trade -. Witness the negotiations between the United States and the Euro-zone. However, it is significant that the Minister mentioned the discussions on the transatlantic trade and investment partnership (TTIP) with a single word. According to the OECD a package of structural reforms in the labor and goods market and a tax and pension reform could increase the per capita income in the EU within ten years by 11%.


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