Tied Together

Masking Debt Divide, Germany and France Draft Joint E.U. Investment Proposal

Schaüble & Sapin
Knowing me, knowing you: French finance minister Michel Sapin (l) and his German counterpart, Wolfgang Schäuble.
  • Why it matters

    Why it matters

    Germany and France have vastly different debt situations, yet the countries’ finance ministers will put forth a joint concept for European growth at an E.U. finance ministers meeting on Thursday.

  • Facts


    • While the German finance minister announced its first zero debt budget in more than four decades, his French counterpart said required debt reductions won’t take place before 2017.
    • Investment in the European Union was 15 percent lower last year than it was in 2007, the ministers say.
    • German Chancellor Merkel advocates structural reforms in labor markets, while her French counterpart has focused on improving domestic demand.
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Wolfgang Schäuble and Michel Sapin make an unlikely pair. While the German finance minister was proud to announce his first debt-free budget in 45 years, his French counterpart had to admit failure on Wednesday, saying that France would not reduce its budget deficit to the European Union limit until 2017.

Nevertheless, Mr. Schäuble and Mr. Sapin are now joining forces. Their joint concept, which Handelsblatt has obtained, is titled: “A Strategy to Support Growth and Investment.” It is addressed to the E.U. finance ministers, who will attend a meeting in Milan starting Thursday. Germany and France are trying to create momentum for a European investment offensive.

Mr. Schäuble and Mr. Sapin believe it is long overdue. They write that in 2013, investment in the European Union was 15 percent lower than in 2007, before the global financial crisis began.

There is “an investment gap of 2 percent of economic output, or €200 billion ($258 billion)” in the euro zone, estimates Marcel Fratzscher, head of the German Institute for Economic Research. Mr. Schäuble and Mr. Sapin stress that private and public investment is “the foundation of growth” – and the key prerequisite to overcoming economic weakness.

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