Hollande's 'courageous' reforms find favour in Germany

15th January 2014, Comments 0 comments

Germany welcomed Wednesday the beleaguered French president's "courageous" plan to spur the economy as a rapprochement towards its own approach but analysts were sceptical about real change.

Foreign Minister Frank-Walter Steinmeier, a Social Democrat in conservative Chancellor Angela Merkel's right-left "grand coalition", said Hollande's proposals marked a bold step.

By focusing on the competitiveness of businesses and budgetary rigour, Hollande is on the right path not only for France but to help Europe emerge from its debilitating economic crisis in stronger shape, he said.

He added that "with the interests of all Europe in mind and the hope that we win back stability", a "courageous" re-orientation of French economic policy along those lines could only be seen as the "right message".

And he made a general comparison between Hollande's plans and painful labour market reforms undertaken under former Social Democratic Party chancellor Gerhard Schroeder more than a decade ago.

Those reforms have been credited as having been the shock therapy Germany needed at a time it was considered the sick man of Europe.

"Also in Germany we needed some time and had to overcome hurdles until an economic and labour market political programme was defined that promised an improvement of the economic situation," he told reporters.

Praise also came from the finance ministry whose spokeswoman expressed "great respect", while deputy parliamentary group leader for Merkel's conservatives Andreas Schockenhoff said the reforms marked a "paradigm change".

He noted that Hollande had spoken out during his election campaign against the austerity policies championed by Germany in fighting Europe's financial crisis.

Hollande laid out plans that were at odds with election promises to boost spending and crack down on the rich, as the French economy struggles after growing more slowly than its EU partners, especially Germany.

Insisting that a return to economic growth was essential to France "retaining its influence", Hollande announced plans for 50 billion euros ($68 billion) in spending cuts between 2015 and 2017 and a 30-billion-euro reduction in corporate payroll charges.

He also urged cooperation with Germany to be stepped up, including on defence matters.

Claire Demesmay, of the German Council on International Relations, said Hollande's speech contained a significant message for Germany's new "grand coalition" government.

"Hollande says he's social democratic. It's important for the Franco-German relationship," she told AFP, adding it was also a "sign" to Berlin that Hollande wanted to work with Germany.

If there is a will to do so, "that may contribute to a certain dynamism in cooperation" and possibly to new initiatives after the European Parliamentary elections in May, she said.

But she remarked that tax cooperation for businesses had already been launched by Merkel and Hollande's conservative predecessor Nicolas Sarkozy.

Also, she said, a joint energy policy had begun a year ago and German-French defence cooperation was highly thorny and was not advancing.

Deutsche Bank economist Gilles Moec agreed.

"There's no turning point," he said of Hollande's speech, adding that since the last quarter of 2012 "the direction is quite clear. There's a confirmation of the direction and, above all, a political message."

He said that 50 billion euros in cuts in public spending was already in the budget.

"The speech (by Hollande) is appealing. The real intention was a positive message for businesses," he said, noting the big question now would be how the measures are put into practice.

© 2014 AFP

0 Comments To This Article