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Harsh words fly between Germany and France over economic plans

April 30, 2013|By Jeevan Vasagar
  • French President Francois Hollande and German Chancellor Angela Merkel have different visions for the European economy.
French President Francois Hollande and German Chancellor Angela Merkel… (Kay Nietfeld / EPA )

BERLIN -- Europe's most important relationship is under increasing strain after French officials accused Germany's leader of "egotistical intransigence" and leaders in Berlin shot back by describing France as the continent's "biggest problem child."

The spat across the Rhine is a symptom of the growing divide in Europe between Germany's insistence on cutting budget deficits to solve the euro debt crisis and increasingly loud demands from economically ailing nations for measures to stimulate growth.

A leaked internal briefing from German Chancellor Angela Merkel’s coalition partner, the Free Democrats, calls French President Francois Hollande "meandering" and says that, because of its highly regulated labor market and generous welfare provisions, France is now "Europe’s biggest problem child." The briefing was published in the German financial daily Handelsblatt alongside another leaked document, a harsh evaluation by the German economics ministry of the French economy's failings.

"French industry is increasingly losing its competitiveness. The relocation of companies abroad continues. Profitability is meager," the ministry's report said.

Those negative assessments followed some equally blunt comments by members of Hollande's Socialist Party in France. In a working paper for a party convention, they accused Merkel of thinking "about nothing except the savings of account holders on the other side of the Rhine, Berlin’s trade balance and her electoral future." The paper called on Hollande's government to engage in a “democratic confrontation” with Germany over its insistence on fiscal rigor.

So far, the public response from the German government has been muted. Merkel’s spokesman dismissed the unflattering French characterization of her as "background music."

But some in Europe are worried about increasing antagonism between the two nations regarded as the driving force behind European integration and behind the region's response to its ongoing debt crisis.

"Europe as we know it was built after the war, on the convergence between two countries which founded the Franco-German axis," Thomas Enders, the German chief executive of EADS, the parent company of Airbus, told the French newspaper Le Monde.

The two countries' economies have diverged. Figures released Tuesday showed that French unemployment, at 11%, was double that of Germany. Germany's unemployment rate, 5.4%, is the second-lowest in Europe.

The Organization for Economic Cooperation and Development has said it expects the French economy to grow by just 0.1% this year, whereas the German economy is forecast to grow by 0.5%.

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