France and Germany: Two economic policy philosophies

There is a clear investment shortfall in the euro zone, which can be seen in: The excess savings over investment; The slowdown in capital growth; New investment needs: renewable energies, other energy transition needs (renovation of housing, electric motors , etc.). Faced with this need for more investment in the euro zone, France and Germany have two very different economic policy philosophies: France has a clear philosophy of state interventionism: it is for the government to choose the technologies and industries of the future and invest in them in partnership with companies; Germany’s philosophy has historically been one of “ ordoliberalism ” : the government does not have an industrial policy and does not intervene in companies’ choices, but should provide a conducive environment. Consistent with this ortholiberal ism , German employers are now calling for tax cuts and not public investments in new technologies. The new European Commission has visibly sided with France’s philosophy. Under the “European Green Deal”, the Commission will adopt an industrial strategy and wants a public investment plan to help achieve the target of increasing investment by EUR 260 billion per year. But this choice clashes with Germany’s traditional economic policy philosophy.