French and German finance and economy ministers are to meet on Monday to discuss growth, spending and France’s budget deficit following a week of giant sell-offs on the European stock markets last week plus a string of alarming economic data.
Wolfgang Schäuble and Sigmar Gabriel will meet Michel Sapin and Emmanuel Macron in Berlin. Less than one month ago, French Finance Minister Mr. Sapin was at Berlin with Prime Minister Manual Valls.
The two main topics for discussion are growth and boosting investment. They will also discuss France’s public finances and Germany’s public spending.
Mr. Macron and Mr. Sapin have asked Germany to match France’s expected €50 billion reduction in public spending with a similar increase.
German newspaper Frankfurter Allgemeine Zeitung quoted Mr. Macron who said “Fifty billion euros savings for us and 50 billion of additional investment by you – that would be a good balance.”
Germany’s Finance Minister Wolfgang Schäuble (left) and his French counterpart Michel Sapin.
Germany is under increasing pressure from the International Monetary Fund, the US Treasury Department, and several Eurozone members to increase infrastructure spending.
During the weekend, Mr. Schäuble admitted that Germany should investment more, but not at the expense of higher debt, he added. He accepted that the criticism that Berlin is not spending enough is justified, and stressed that his government is trying to change that.
Mr. Schaeuble said:
“We must invest more and improve our competitiveness. We must get to work on this – quickly and in a concrete way. It will not all happen overnight. But we must work on certain things now, like the European digital union, the energy union or the sustainable maintaining of our infrastructure.”
Germany is likely to raise its defense budget following demands from the international community. It is currently supplying northern Iraqi Kurds with arms to defend themselves against Islamic State militants.
Germany’s GDP shrank in Q2 2014. Its exports fell in August, and all economic forecasts have been downgraded.