Emmanuel Macron and Angela Merkel: saviours of the eurozone?
(Image credit: 2015 Ulrich Baumgarten)
"Like all the best clichs, the notion that the European Union is driven by a Franco-German locomotive' is grounded in truth," says The Economist's Charlemagne column. The compromises forged between Paris and Berlin have defined post-war Europe, yet lately "the French part of the engine has run out of steam".
Emmanuel Macron, the new president, is now promising to kick-start the French economy, and his visit to Berlin this week raises the question of whether the Franco-German engine could start motoring again. Yet "there is little appetite anywhere in Europe for the treaty changes that a major currency revamp would require" and upcoming German elections are likely to delay any agreement for the time being. "Many Germans think their contributions to eurozone bail-outs over the years have shown plenty of solidarity already."
There was little on offer this week beyond warm words, although Merkel did say that "it's possible to change the treaty if it makes sense". Stlll, we shouldn't write the two leaders' efforts off. British commentators underestimate the resilience of the Paris-Berlin axis at their peril, as Daniel Hannan points out in The Daily Telegraph.
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There are real differences "Macron wants the EU to pool some of its members' debts; Merkel has had enough of carrying others' liabilities. He wants to relax the rules on public spending; she wants to see him make domestic reforms first." But "for the French and the Germans, the EU is emotional rather than political". The pair share a commitment to the eurozone and to political integration.
Indeed, Merkel may now have more room to manoeuvre on the question of eurozone reform than previously thought, notes the Financial Times. The opposition Social Democrats have suffered bruising defeats in recent regional elections and, though the general election is still four months away, "Merkel's domestic position looks more secure than it has been since the start of the migration crisis". A partnership with Macron is the best chance in years "to address the EU's endemic problems and give the bloc a new lease of life".
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Alex is an investment writer who has been contributing to MoneyWeek since 2015. He has been the magazine’s markets editor since 2019.
Alex has a passion for demystifying the often arcane world of finance for a general readership. While financial media tends to focus compulsively on the latest trend, the best opportunities can lie forgotten elsewhere.
He is especially interested in European equities – where his fluent French helps him to cover the continent’s largest bourse – and emerging markets, where his experience living in Beijing, and conversational Chinese, prove useful.
Hailing from Leeds, he studied Philosophy, Politics and Economics at the University of Oxford. He also holds a Master of Public Health from the University of Manchester.
