Report
Patrick Artus

An economic crisis in Germany would mend the Franco-German couple

In the recent period, significant divergences have appeared between France’s and Germany's positions on Europe: Germany accepts only a minimalist view (a common investment budget) of a euro - zone budget suggested by France; Germany rejects coordination of tax, social and labour market policies, shows only limited enthusiasm for taxing CO 2 or for a European industrial policy, wants to maintain fiscal discipline, seeks a compromise with the United Kingdom on Brexit and is in favour of free trade with the United States, all points where France’s position is different at present . In reality, whatever the Aachen Treaty of January 2019 says, Germany currently has a non-cooperative view of the euro zone: it rejects coordination of several economic policies and accepts the current competition situation between the member countries. But the German economy will deteriorate, given the country’s major exposure to the industries of the past which are already now facing problems, due to excess household savings and the loss of cost-competitiveness. If Germany has a weak economy for a long time, it will perhaps adopt a more cooperative vision of the euro zone, which would then be positive for it. As long as Germany had a strong economy, cooperation with the other euro-zone countries represented a cost for Germany.
Provider
Natixis
Natixis

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Analysts
Patrick Artus

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