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French PM in Berlin to mend rift in Europe's power duo
Published on:Thursday, November 15, 2012 - 20:55
France's prime minister sought to ease fears about the French economy on his first official trip to Germany Thursday, buoyed by figures showing it had bounced back from a dip in growth.
The visit by Jean-Marc Ayrault, a fluent German speaker, who was due to meet Chancellor Angela Merkel later came amid tensions over economic policy between the two neighbours which have historically driven Europe.
Hours before the visit, growth data from Europe's two top economies underscored the urgency of restoring effective leadership out of the financial crisis that has buffeted the eurozone for three years.
While third-quarter growth in Germany practically ground to a halt, figures from France showed its economy shrank by 0.1 percent in the second quarter but rebounded for growth of 0.2 percent in the third.
On his first stop in the German capital, Ayrault addressed business leaders about what he called the "pressing" economic reforms France had undertaken.
"From 2012 the deficit will be reduced to 4.5 percent of GDP, whereas if nothing had been decided from this summer it would have reached 5.0 percent," he said.
"This work must be continued and we will respect the aim of 3.0 percent in 2013," he said describing the efforts made as "considerable" and even "unprecedented".
EU rules stipulate that member states must keep their budget deficits within three percent of output.
Before his speech, a few words of which he made in German, he had called the latest growth data from France "promising but not sufficient".
Merkel's spokesman had said on the eve of his visit that the French premier would be received "with curiosity".
"He will be able to report to us on the plans of the French government, the measures they want to introduce to foster more competitiveness," Steffen Seibert told reporters, describing relations as "close" and "constructive".
Under former French leader Nicolas Sarkozy, the Franco-German duo spearheaded much of Europe's response to the debt crisis, outlining plans before every EU summit and often holding joint news conferences in Brussels.
However, since the election of new Socialist President Francois Hollande, ties between the two have noticeably cooled.
The pair have also differed on the best solution to the eurozone debt crisis, with Hollande pushing for measures to bolster growth in the bloc while Merkel wants debts to be tackled first before stimulating the economy.
The latest spat has revolved around media reports that Finance Minister Wolfgang Schaeuble had ordered Germany's so-called "Five Wise Men" of independent economic advisors to draw up reform proposals for France.
The panel and the German government quickly denied they had any such plans.
Ayrault himself told Thursday's Sueddeutsche Zeitung daily in an interview that he did not want "to pour oil on the fire".
"Franco-German relations need to be characterised by mutual respect," he told the paper but acknowledged: "We need to speak more together. At the moment, there is perhaps not enough understanding."
The tone in the German press in the run-up to the visit has turned against France, with mass circulation Bild asking: "Is France the new Greece?"
And a close Merkel ally, Volker Kauder, recently expressed doubt that Paris was really committed to the economic reforms required to unlock growth.
Ayrault in his speech to German company chiefs said he knew there was interest in Germany about France's economic policy.
"Similarly developments in Germany are always observed carefully in my country," he added saying the mutual interest was natural.