FEPS Fresh Thinking

The French Prime Minister Manuel Valls gave a speech this week on the general policies to implement in the country to overcome the crisis and to implement an economic policy in order to foster growth and reduce the high unemployment rate in France. The content of the speech was submitted to a confident vote in the French parliament. The prime minister got the necessary majority.

There was a very striking paragraph in his speech, which needs to be addressed. The prime minister said, “it is France and France alone that decides what the country has to do”. And he stipulated that there should be a serious talk with Germany, which has to assume its responsibilities for Europe.

For sure, it is the responsibility of each government to implement its political choices. But, France is an entire part of the European Union. This means France is as committed to the treaties as all other members of the Union. Being a member of the monetary union means also that there are mutual responsibilities and dependencies to respect. Europe is still in a deep economic and social crisis and especially within the Eurozone the utmost has to be done to sort out of the crisis and to generate growth and employment.

France, like Germany, has to not only exploit the opportunities of the Monetary Union but also to implement policies that respect the various regulations. The members of the euro area have to work together in a mutual way of respective understanding. If the current government in France is accusing in a more or less brutal way its other partners this is not helpful. The French government is as responsible as the German or Italian government for what is going on. The Union is shaped in the way that requires common responsibility. It makes no sense to accuse one government. It is necessary to work together, implement policies on the national level as well as on the European level on the basis of the method often described as the European communitarian approach.

Referring to the national approach helps right wing populists and challenges what has been so far achieved in Europe. What we need is not a roll-back on national policies but to look forward on common European policies. It is not one country that is responsible for the problems of another member state of the European Union. It is the common European responsibility of each and every member state. One can only subscribe to agree on the “visible hand of the state” but this visible hand is in Europe so far “the visible hand of the Union”.

New mechanisms of coordination have been implemented since the crisis emerged. Their good functioning cannot be taken for granted. The European Semester has become the established framework for the coordination of economic, social and growth policies. It is within this framework that France should look to tackle its problems of unemployment, sluggish growth and growing inequalities. Overcoming the crisis is not a national task any more; it is first and foremost a European responsibility. All this does not mean that the current European Growth and Stability pact is the only possible way to tackle the problems. European fiscal policy should be seen more as having the fundamental function of ensuring high-levels of aggregate demand. This strongly implies that until investment recovers from its long-term decline and households are able to spend without incurring high levels of debt; budget deficits will have to continue. This also goes with a need for coordinated pan-European public investment policies to spearhead growth and employment across Europe. A coordinated action for such a policy is much more effective than individual member states intervening independently in their own economies.

It is in that way that the French Prime Minister should talk to his European partners and especially to Germany. It is not helpful to accuse Germany and as a consequence heat up national resentments.

On the other side it is also not helpful that the German press is characterising French politicians and politics as schizophrenic. The French President, like the German chancellor, is elected. Both countries are part of Europe and hence in the same boat. The eternal debate about the German-French motor is a double-sided issue. If one is sick the other cannot survive in the medium and long run. Neither France nor Germany afford to go it alone any more.

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