“circleWhen France and Germany move forward, all of Europe moves forward. Otherwise, the economy will grind to a halt,'' were the words of former French President Jacques Chirac almost a quarter of a century ago during a regular meeting of love between the two largest member states of the European Union. .
So how would Mr. Chirac, who passed away in 2019, assess the current state of the famous Franco-German engine that powered many post-war European projects since the alliance was founded? Overall, it looks like the bust has been enlarged rather than collapsed.
President Emmanuel Macron on Friday named his staunch centrist ally François Bayrou as the new prime minister. He will become France's fourth prime minister this year and will have the difficult task of establishing a stable government after the short-lived government since France collapsed last week. 1958.
Meanwhile, France's public sector deficit is on track to exceed 6.1% of GDP this year, more than double the euro zone limit. Public debt has reached 110% of GDP and is rising. And this month the bond market rated France's creditworthiness slightly lower than Greece's.
In Germany, the fractious center-left-led coalition that had ruled for the past three years collapsed last month under the weight of its own ideological contradictions and multiple crises triggered by Russia's full-scale invasion of Ukraine. did.
Whoever becomes prime minister after the February 23 election will have to tackle the following challenges: The world's worst-performing large economy Suffering from high energy costs, labor costs, and bureaucracy, crumbling infrastructure And digital expansion is progressing at a rapid pace.
An economic slowdown with China, its main trading partner, is also hurting Germany's traditional strength in exports, while its vital automotive industry has been slow to develop attractive electric vehicles (EVs). , currently facing the threat of U.S. tariff changes under the Donald Trump administration. .
France cannot hold new parliamentary elections until July, Germany may not have a new government until June, and political fervor at the top of two of the EU's most influential countries could shape EU decision-making. Obstacles are inevitable.
Paris and Berlin are considered the EU's core power axes, driving policy and defining the main contours of its agenda. A lack of strong, stable governments has prevented both capitals from making major policy decisions, potentially leaving the region in a quagmire for months.
The parallel economic and financial difficulties of the two major powers will also weigh heavily on the EU. Some analysts believe that the EU's two largest economies, accounting for 41% of total gross domestic product (GDP) among the EU's 27 member states, will both shrink economically by 2025.
The timing couldn't have been worse, with Europe facing a resurgence of America First under President Donald Trump's second term.
German industry (in particular) is in crisis.
It's not that hard to understand how this happened. But figuring out how France and Germany can break out of the ongoing spiral of political and economic ruin is not so easy.
When the German government collapsed last month, observers were less surprised by its collapse than by how it had dragged its feet for so long.
When Chancellor Olaf Scholz sacked domineering Finance Minister Christian Lindner on November 6 over months of acrimonious budget disputes, he set in motion a chain of events that led optimists to believe the country was on the verge of recovery. He claims that he has provided an important opportunity for the United States.
“Are we brave enough to invest strongly in our future as a strong nation? Can we secure jobs and modernize our industries? Are we able to secure stable pensions, reliable health care and quality care? ” a defiant Scholz said Wednesday.
Lindner's dismissal leaves Germany with a small minority coalition of Scholz's Social Democratic Party (SPD) and the ecologist Green Party, capable of only the most perfunctory policymaking until a new government is formed. It became.
Although historically unpopular, Scholz is still running as the party's reelection candidate and will face a vote of confidence on Monday that he called to trigger a new election.
If Mr. Scholz is defeated in a parliamentary vote, President Frank-Walter Steinmeier will dissolve parliament and Germany will officially embark on a bitterly divided election campaign before the Christmas holidays.
Recent opinion polls show that the center-right CDU/CSU has 31% support, the far-right Alternative for Germany (AfD) has 18%, Scholz's SPD has 17%, and the Green Party has 13%. are. The FDP and the new left-wing conservative Sala Wagenknecht Alliance both score around 5%, the threshold for parliamentary representation.
So the smart money to be Germany's next leader lies with Friedrich Merz. He is a long-time rival of the more moderate Christian Democrat Angela Merkel, who was largely cast into the political wilderness during her 16 years as chancellor.
He used that time to make a small fortune in business, particularly in the German arm of the multinational investment company BlackRock. Merz, notoriously short-tempered and said to have softened somewhat with age, has vowed to lead Germany out of deep economic recession while taking a tougher stance on defense, Russia and immigration.
However, Merz's center-right CDU/CSU coalition has little chance of winning an absolute majority even if it were to become the largest party, and Merz's economic reform plans will be watered down by the choice of coalition partner. It is inevitable that it will become. All major political parties exclude cooperation with the far right.
Kai Alzheimer, a political scientist at the university, said: “Germany's current economic model, in which the supply of cheap fossil fuels and the production of cars with internal combustion engines play a central role, seems outdated, but politicians We rarely say this openly.” of Mainz. “I am at least skeptical that there will be a real fresh start in the near future.”
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If the new government fails to turn things around quickly, the biggest beneficiary will be the AfD, an anti-immigrant group particularly popular with voters in the east.
Ursula Münsch, head of the Bavaria think tank Academy of Political Education, said the SPD was likely to partner with Merz to form a centrist government, and disappointment and disillusionment could be a toxic combination. Ta.
Given Germany's laggards and years of avoiding pressing structural problems, “the expectations of voters, businesses and the media are very high, too high,” she said. “That would be too much taxation for any government.”
But Munsch said the new consensus that Germany needed to address its weaknesses head-on could give an outspoken chancellor with a large enough majority a convincing mandate. . “I am convinced that by doing so, Germans can become optimistic again and have even more faith in democracy,” she said.
France's current political problems – the country is undergoing its worst period of political instability since World War II – are largely due to the crushing defeat of centrists in France by the far-right National Rally (RN), led by Marine Le Pen. It all stems from Macron's decision to dissolve parliament in response to the incident. Spring European elections.
In the parliamentary elections, the New Popular Front (NFP), a coalition of left-wing parties ranging from the mainstream Socialist Party (PS) to the radical leftist France Inboud (LFI) and led by political agitator Jean-Luc Mélenchon, won. , won the most seats.
Macron's alliance lost to second place, and the RN (although it became the single largest party) came in third place. Parliament was divided into three roughly equal and opposing blocs: the broad left, the center, and the right/far right, but crucially, none of the blocs could come close to a parliamentary majority. .
After weeks of hesitation over appointing a prime minister from the left, Mr Macron, a veteran conservative and lead Brexit negotiator, is backed by a fragile minority coalition of centrist and centre-right MPs. Nominated Michel Barnier.
This month, the far-right RN teamed up with the left-wing NFP to oust Barnier's government with a no-confidence vote over the 2025 budget, which included around €20bn (£16.5bn) in tax increases and €40bn in public spending. cut.
His successor, Mr. Bayrou, will likely try to involve parts of the centre-left to assemble a stronger ruling majority, or at least secure a “non-aggression pact” that does not expose the new government to exactly the same threats. I have to try. A no-confidence motion supported by both the left and the far-right, such as Mr. Barnier.
But the parliamentary arithmetic remains the same. Macron “appears to be preparing to forge a more stable governing arrangement with the Conservatives, Socialists, Communists and Greens,” who are “ready to compromise and avoid another government at the mercy of the RN.” It seems like there is.” Rim Momtaz said Carnegie European Think Tank.
“But it is only a temporary solution. He does not yet have a solution to reverse the surge in popularity that Le Pen has enjoyed since 2017 and the strong chance of being elected president in 2027. .”
On the other hand, the fact that the outgoing government's collapse was triggered by an austerity budget aimed primarily at partially recovering France's deteriorated national finances does not bode well for France's fiscal problems.
But at least France appears to have “learned the lesson” that “credible and slow fiscal tightening” is needed, said John Springford, an economist at the Center for European Reform. He said Germany, which needs tax and labor market reforms and public investment to increase spending, has not yet taken that step.
But from an EU perspective, some analysts are cautiously optimistic. “It's premature to say that France and Germany will be weak,” said Mujtaba Rahman of consultancy Eurasia Group. “By the second half of next year, the French and German engines should be fired up again.”
Rahman said it was “very positive” that Germany's general election had been brought forward to February, adding: “It became clear early this year that we would be looking for a more coherent coalition government and a more Russia-sceptic one.” There will be a new prime minister.” And Mr. Merz and Mr. Macron will be more aligned on all important issues than Mr. Macron and Mr. Scholz. ”
President Macron's domestic problems will not disappear overnight. “But there does seem to be a sense of national responsibility to form a government, pass a budget and provide the minimum stability that France needs and that Europe needs from France,” he said. .
Most importantly, Trump 2.0 “has given weight and credibility to everything Mr. Macron has been saying about security, defense and strategic autonomy,” he said. The Paris-Berlin partnership “will be reinvigorated and under a new and improved EU leadership, these people will offer Europe the best chance of mitigating the worst that may yet come.”
