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April 20, 2018


Macron in Berlin

The news out of the meeting between Angela Merkel and Emmanuel Macron in Berlin yesterday was that there was no real news to report. FAZ did not even carry the visit on the front page, and contented itself with a rather lacklustre comment on the state of Franco-German relations. Nor did any of the French papers, they were more interested in how the French view Macron (see our next story). 

Handelsblatt offered some further details on the compromises Merkel may be ready to accept. It says efforts were under way in the CDU to give Merkel some room for manoeuvre in the upcoming negotiations - but without her conceding anything of substance. As we already reported, one was her idea to include the economics ministers in the Eurogroup, but there is not much support for this. Another possible compromise outlined by Handelsblatt relates to the discussion about a eurozone budget. Merkel’s people are pushing for an innovation fund. This is obviously only a PR exercise, and nothing of any macroeconomic significance. Worse, we think the money for such a fund will simply be diverted from other sources, and reclassified. But we would not rule out that France and Germany may in the end agree on a fund, which would allow Macron to claim that he had secured agreement on a eurozone budget while the Germans can emphasise the limited nature of what is agreed.

We find this type of discussion utterly depressing. It is very clear that the German political system does not entertain the idea of eurozone reform, and neither do German media. The debate about eurozone reform has degenerated into a window dressing exercise. We have yet to see any evidence that Macron is ready, or able, to put any real pressure on Merkel and the Bundestag. If he can't or won’t, Germany will not budge.

Our other stories

We also have stories on what the French think of Emmanuel Macron one year on; of the EU rejecting the UK's proposal for Northern Ireland; of the EU's toughtening stance in trade talks with the US; on the German car industry; on the next mandate to build an Italian government; on Caixabank and Chinese money laundering; on Greek court rulings over Turkish soldiers and asylum seekers; and on Greek debt relief talks in Washington.

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