Hollande’s plan to tackle soaring French unemployment by swelling the size of the public service is anathema to the thrifty chancellor, who is keen to see eurozone governments cut their spending. […] But even more worrying for Merkel is Hollande’s pledge to renegotiate her precious, prized treaty that will force all eurozone countries to follow a rigid budgetary discipline.
Karen Maley, Business Spectator
It’s an election year for France, and that’s proving to be bad news for Germany’s chancellor Angela Merkel. Her current counterpart in the Élysée Palace, Nicolas Sarkozy, is largely in lock-step with the Germans. But Sarkozy is facing an uphill battle for re-election. He will likely be succeeded later this year by the socialist candidate, François Hollande. And Hollande is far less receptive than Sarkozy to the German push to reform Europe.
Of particular concern, as Karen Maley notes, is that Hollande will seek to renegotiate a new Eurozone fiscal pact — agreed only last month — that would, among other things, bind governments in the single currency union to budget deficit caps. Hollande wants to water down the treaty, which would essentially render it useless in promoting the kind of fiscal restraint that Berlin is seeking.
Unsurprisingly then, Merkel is hoping for a Sarkozy win. Indeed, she is effectively campaigning for her man in Paris. But with Hollande in such a commanding position in the polls, the risk is that Merkel will simply end up poisoning the future Franco-German relationship.
