RE: Brexit deal ?8 Dec 2020 13:57
Berlin is already exasperated by his incessant grandstanding, his trifling with the Atlantic alliance, and his rogue diplomacy on Russia, Turkey, the Balkans, Libya – the list is long – even as he sports the plumage of the ultimate Europeanist. True, Chancellor Angela Merkel would not let the Franco-German axis break down over a no-deal as such, though she famously let slip last year that she was “tired of picking up the pieces” left by Mr Macron’s serial fuites en avant. But the structural fact remains that the German political class seeks a tight amicable relationship with the UK, and Germany Inc seeks to protect unfettered access to the UK market along with a £40bn bilateral trade surplus (including the Rotterdam effect) and deeply entwined supply chains. Brexiteers may overstate the threat to a German car industry already in systemic crisis, but hard-core anti-Brexiteers equally understate it. The risk for France is what happens after Mrs Merkel goes. The next generation may not continue to indulge Mr Macron’s Gaulliste petulance.
The gap in raw economic power between Germany and France was already subverting the hallowed parity of the European Project long before the pandemic hit. That gap is now visibly wider. Eight years ago the public debt ratio in Germany was 81pc of GDP and in France it was 91pc, according to IMF data. They will end this year at 71pc and 119pc respectively. This is becoming an untenable stretch for two countries that are supposed to be the twin pillars of monetary union. It will get worse at a brisk pace because Germany will again have a large primary budget surplus as soon as 2022 while France will still have a primary deficit above 4pc, with scant improvement as far as the eye can see – leaving aside the contingent liabilities of ballooning private sector debt.
Mr Macron came to office vowing to push through a Gallic version of Germany’s Hartz IV reforms and pull his country kicking and screaming into the modern market age. His explicit intent was to restore French ‘credibility’ in the eyes of Berlin. But it is his own credibility that has slowly melted. Three and a half years on, France’s commercial structure is essentially unchanged, pension reform has run aground, and Mr Macron presides over a seething and unreconciled nation, first the gilets jaunes, and now twin revolts over security laws and his handling of the pandemic.
In short, France has slipped from Carolingian ‘core’ status to something closer to Club Med status. Germany faces the prospect of having to ‘carry’ the country along with Italy and Spain within monetary union – disguised for now by the quasi-fiscal bond purchases of the European Cen
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