For more than 60 years, France and Germany have maintained a fruitful friendship. By working together and building compromises despite frequent initial differences, our two countries have helped move Europe forward. Today, the Franco-German dialogue has weakened, mainly due to political instability on both sides of the Rhine. However, this dialogue is now more necessary than ever, in the face of rising threats to Europe.
In addition to long-term projects linked to climate, demographic aging and digitalization, we must face geopolitical crises and tensions. The result of the American election could reinforce these tensions and should sound a wake-up call. In this context, France and Germany must adopt a strong common position. To divide us would be to condemn us, and to condemn Europe. But if we speak with one voice and work more closely with our European neighbors, Europe can be an important player on the international stage.
As colleagues on the ECB Governing Council, as friends and committed Europeans, we are calling today, together, to relaunch joint Franco-German action. Because we can bear witness to its usefulness over the last 15 years in overcoming crises, and because we are convinced that Europe still has the levers to control its economic destiny and strengthen its growth, if – and only if – it does so. to the common will.
I. Let's not forget the last 15 years. Starting in 2009, the global financial crisis evolved into a sovereign debt crisis in the Eurozone. Some highly indebted member states faced the prospect of losing access to capital markets, and the eurozone was in danger of breaking up. On the contrary, Europe has become more robust: member states have established a rescue shield and created the European Stability Mechanism and the Banking Union. Our countries initially had different opinions. France favored greater debt mutualization, while Germany insisted on the individual responsibility of each country. But through dialogue based on trust, our governments have managed to find common ground. France and Germany once again reached a fruitful compromise in 2020, in the face of the Covid crisis. Member States have adopted an exceptional and temporary crisis management tool, the fund Next Generation EUendowed with 750 billion euros, which made it possible to manage the effects of the crisis.
The 26 members of the ECB Governing Council, chaired by Christine Lagarde, demonstrate respect and trust in each other. We have been faced with the inflationary surge of 2021-2022; after rising to more than 10% two years ago, inflation has fallen back to 2.0% today. We have not always completely agreed on the monetary decisions to be made, but with our colleagues we have always been able to decide. And victory against inflation is in sight. We are also strong supporters of the digital euro for retail payments, as well as a wholesale digital currency for financial markets. A digital euro would be a real European project, based entirely on a European digital infrastructure and thus strengthening Europe's autonomy in payments. We also welcome the review of European budgetary rules which was completed last year. The euro zone needs stable and sustainable public finances to be able to face its challenges. We hope that every country will firmly follow these common rules.
II. What must happen now? In the economic field, our two countries and Europe have a choice: either they continue with the low growth, low productivity and low innovation of the last 30 years – and particularly the most recent years; what the Draghi report describes as a “slow agony”. Either they mobilize their forces to achieve an ambitious, and even disruptive, roadmap. This choice deserves two explanations:
- Obviously, American economic policy will increase the challenges: we both believe that protectionism is detrimental to price stability and growth – including in the United States – and that too lax fiscal policy could increase long-term interest rates. We must hope that discussions will be possible at the G7 and elsewhere. But our destiny is also in our hands: we cannot change the other side of the Atlantic, but we can and must change ours.
- We believe the reports from Mario Draghi and Enrico Letta provide important guidance for the roadmap. Regarding financing, we are both in favor of using the European budget to address the challenges that need to be addressed at European level. More common European debt is, however, not at this stage a prerequisite for moving forward: let us give priority to the many non-costly and more structural proposals in these reports.
How we need to move forward, with a greater sense of urgency, can be summed up in three points: deepening our single market, creating a Savings and Investment Union, and cutting bureaucracy to increase innovation – or , to use physiological terms: we must multiply the size speak muscleand by vitesse.
The size : Our single market is as large in terms of GDP as that of the United States, but it is fragmented, particularly in services and telecommunications, which weighs on its attractiveness and dynamism. According to the IMF, reducing internal obstacles by just 10% would add up to 7% to growth in Europe. This question of size also covers the establishment of a truly European competition policy.
Financial muscle : The Savings and Investment Union will be based on two major components: a completed Banking Union and a refocused Capital Markets Union. We indeed have both great investment needs and resources (with more than 300 billion euros of excess private savings each year); but unlike the United States, we do not yet have sufficient intermediation, particularly in terms of equity and venture capital.
Speed : To move forward, we need more innovation and less bureaucracy. Indeed, the digital and energy transitions will be based on technological breakthroughs; we should therefore evolve from a purely regulatory mindset to a framework and culture that enables innovative entrepreneurs to bring their ideas to life. Just as Robert Schuman proposed a Coal and Steel Community in 1950, we should now have the audacity to launch an AI and Technology Community.
Russia's war against Ukraine brutally shows us that economic integration does not guarantee peace. A stable Europe would also benefit greatly from close coordination between France and Germany beyond economic policy. It is true that our two countries sometimes have divergent opinions in areas such as security, trade and energy. But the more threatening the world becomes, the more important it is to overcome our differences and instead emphasize what unites us. We welcome the compromise reached in October 2023 to reform the EU electricity market. And we call for a much more European approach to defense policies. Considering defense as a truly European mission should lead to joint purchases of arms, and therefore to a higher common budget for defense. If our political and economic dialogue regains its historic quality, then France and Germany will help Europe to resist in these difficult times, and to accelerate. To this essential objective, we are and will both remain fully dedicated.
Related News :