In World Economy News 15/05/2017
German Finance Minister Wolfgang Schaeuble told a magazine he shared French president-elect Emmanuel Macron’s view that financial transfers from richer to poorer states are necessary within the euro zone.
Macron, who is due to meet with German Chancellor Angela Merkel in Berlin on Monday, has promised to press ahead with closer European integration.
Asked whether Macron was right in believing Europe and the euro zone need a “transfer union”, Schaeuble told Germany’s Der Spiegel magazine: “You can’t build a community of states of varying strengths without a certain balance.”
“That’s reflected in the European budget and bailout programmes, for example, and that’s why there are net contributors and net recipients in Europe. A union can’t exist if the stronger members don’t vouch for the weaker ones,” he added in an interview to be published Saturday.
Some conservatives around Merkel worry the euro zone could develop into a “transfer union” in which Germany is asked to pay for struggling states that resist reforms.
Schaeuble, a veteran member of Merkel’s party, said if countries wanted to make Europe stronger, it was necessary for each individual country to become stronger first – including France and Italy but also Germany.
Schaeuble also signalled he would not object if the European Commission gave its blessing to possible French budget deficits: “It’s up to the European Commission to design the budget rules.”
He added: “The German government and I have never objected to a ruling of the Commission on how the deficits of countries like France should be judged.”
The European Commission estimates France’s deficit will be 3 percent of gross domestic product (GDP) this year, from 2.9 percent previously forecast, and 3.2 percent in 2018 from the previous forecast of 3.1 percent. EU rules say countries should keep their deficits below 3 percent of GDP.
Schaeuble expressed hope that Macron would reduce the deficit, saying: “France can do it.”
The Commission expects Germany’s trade surplus, an indicator that has often caused conflicts with Brussels for being excessive, will slow to 8.0 percent of GDP this year from 8.5 percent in 2016.
Schaeuble told Der Spiegel he considered Macron’s criticism of the high German trade surplus to be justified, but said it would decline in coming years, and its size was not the result of politics
“It’s right that the German current account surplus is too high at just over 8 percent,” he said. “It’s due to the high competitiveness of the German economy but also due to the fact that we are part of a currency union.”
Source: Reuters (Reporting by Michelle Martin)
