France and Germany to unveil eurozone reforms by March

Germany and France will offer their joint vision for reforming the eurozone by March, German Chancellor Angela Merkel said on Friday, in an effort to bridge divisions over the future of the single currency.

France and Germany to unveil eurozone reforms by March

Meeting without departure-bound Britain, the bloc's 27 leaders were tasked by EU President Donald Tusk to speak freely about their often clashing visions for the single currency's future at a summit widely expected to be dominated by Brexit.

Overhauling the eurozone and making it more resilient to economic shocks has been a top priority of French President Emmanuel Macron, as well as European Commission head Jean-Claude Juncker.

But these ambitions have been stymied by political uncertainty in Germany, where Macron-ally Merkel is still trying to form a government after the
pro-business FDP party abandoned talks amid doubts about eurozone reform.

“We will find a common position because it is necessary for Europe,” Merkel said at a news briefing, speaking alongside Macron after a summit that was dominated by Brexit.

Merkel's overture to France will rankle her conservative CDU party, which toes a austerity-minded line on economic matters.

Reform of the eurozone is often blocked in a political split, with rich countries — such as Germany and the Netherlands — reticent to adopt policies that share risks with their heavily-indebted eurozone partners, such as France, Spain, Italy or Greece.

The Netherlands pushed its austerity-driven vision of the eurozone at the summit, with Prime Minister Mark Rutte demanding reforms by overspending governments.

“I noticed that with a certain number of our colleagues that with the euro we always talk money… not how we can make our economies more competitive,” Rutte said after the talks.

The resistance has so far blocked Macron's idea of a eurozone budget and held up the creation of a Europe-wide deposit insurance scheme, the last
remaining pillar of the banking union.

“To us, it is more important to make some member states more resilient for the next financial crisis,” an EU diplomat said.

'Large consensus'

The loss of momentum was confirmed in proposals last week by the European Commission, the executive arm of the EU, that put off more ambitious ideas, such as the creation of a European finance minister, until after European elections in 2019.

The original plan was for leaders to discuss a range of topics on Friday, with a further summit in June to table concrete decisions.

According to EU President Donald Tusk, who coordinates the summits, thereexists a “large consensus” to create a European Monetary Fund that would function as a financial firewall to any new financial crisis and handle bailouts.

There is also support to complete the banking union, albeit at a very gradual pace.


Paris, Berlin agree on future eurozone budget: French ministry source

France and Germany have agreed on the broad outlines of a proposed eurozone budget which they will present to EU finance ministers in Brussels on Monday, a French finance ministry source said.

Paris, Berlin agree on future eurozone budget: French ministry source
French Economy and Finance Minister Bruno Le Maire (R) and German Finance Minister and Vice-Chancellor Olaf Scholz. File photo: AFP

The common single-currency budget was one of French President Emmanuel Macron's key ideas for protecting the euro, but it caused differences between France and Germany, the region's two largest economies.

French Finance Minister Bruno Le Maire and Germany's minister, Olaf Scholz, will “jointly present a proposition on Monday… about the layout for a budget for the eurozone,” the ministry source told AFP.

“It's a major step forward,” the source said. “We will look forward to sharing with other members.”

The source said the amount of the budget has not been established as the proposal was to first set out the “architecture and main principles” of the budget.

According to a copy of the French-German proposal, the budget would be part of the EU budget structure and governed by the 19 euro members.

Macron will travel to Berlin at the weekend to meet with German Chancellor Angela Merkel where the two leaders will bolster their alliance as champions of a united Europe.

READ ALSO: France and Germany push for compromise on eurozone reform