Merkel Lobbied by Valls to Give France Room for ReformsMark Deen and Patrick Donahue
French Prime Minister Manuel Valls sought to reassure Germans and garner support for his economic policy, saying he faces a persuasion job after a decade during which France fell behind its biggest neighbor.
“What I came to say to the German people is this: I understand the doubts,” Valls said at a press conference with Chancellor Angela Merkel after talks in Berlin today. “I haven’t come to ask for anything in particular, any indulgence. France will assume its responsibilities.”
The remarks underline the reputation earned by France as it seeks to regain competitiveness and restore balance to the relationship between the euro area’s two biggest economies. Merkel praised French efforts to overhaul the economy while reminding Valls that the euro’s deficit and budget limits can’t be ignored because credibility is “crucial.”
Valls, who became prime minister in April, made his inaugural visit to Merkel’s chancellery as France’s stagnant economy saps its political clout in Europe, leaving President Francois Hollande dependent on Merkel’s backing at a time when his government is breaking European Union deficit rules.
Valls is trying to trim government spending by 50 billion euros ($64 billion) over the next three years and simplify laws and taxes to make France more hospitable to business. He has pledged not to alter the law that limits working times to 35 hours a week, nor tamper with the minimum wage.
“I want to tell Germans: when it comes to reforms, we will do them because it’s in our own interest,” Valls said. “Germans like France when she keeps her commitments. The French likes a Germany that understands them. The Germans will like the France that carries out reforms. My mission is to reform France.”
With an economy that failed to grow in the first two quarters and inflation subdued, the French government now expects the deficit to rise this year for the first time in half a decade. The performance breaks commitments the country made to its EU partners in April and puts France at the heart of the debate about the bloc’s deficit rules.
In Germany, France’s performance has drawn criticism in the press, with the Der Spiegel weekly writing about “The New Sick Man of Europe.” Interpreting a policy speech by Valls in Paris last week, the Frankfurter Allgemeine Zeitung newspaper carried the headline “It’s the Germans’ Fault.”
“What’s very important in Franco-German relations is to avoid oversimplification,” Valls said. “Both the French and German press need to avoid caricature.”
Standing beside the French prime minister, Merkel sought to be conciliatory without giving her neighbor a blank check.
“We discussed what efforts are being undertaken to consolidate budgets, but also what’s necessary to create growth in the euro area,” Merkel said. “For me it’s crucial that Europe is credible, which means we stand by what we agreed to together.”
She lauded “an impressive series of efforts” to overhaul France’s economy presented by Valls, while reserving judgment on the agenda’s chances of success. The assessment of whether France is conforming to euro-area rules will come from the European Commission, she said.