Follow us
Back to Flash&Facts

The driving Forces of Europe's economy

For decades, and rightly so, it was stressed that France and Germany were the driving forces of Europe in both political and economic terms. Politically this view was completely accurate. However, on the economic front the situation was found to be substantially different. Today, there are serious differences between these two economic models. France is suffering mostly from the loss of competitiveness of its companies, a high structural unemployment (10.5%), but also from unsustainable trends in public finances. Its external trade shows a deficit of € 61,2 billion (2013). Germany has almost restored full employment (6%) and will achieve a balanced budget. Its external trade shows a surplus of € 200 billion (2013). Germany, together with the European Commission, has one objective: force France to pursue deeper reforms in exchange for time to consolidate its deficit. But the country must undertake basic reforms which had been put off for too long: a deep reform of the functioning of the state and of local government authorities that must hinge on substantial job cuts in the public service; but also reform the social spending which is largely excessive if we consider the large deficit of the budget. For its part, Germany should at least adopt expansionary fiscal policies that will target the country's poor infrastructure including the highways, the bridges, the railways which require enormous investments. The European Commission has proposed a € 315 billion plan to stimulate investment. But that won't be enough to restart the economic machine in 28 countries. One thing is certain: there will be no easy solution. In the absence of a dramatic proposal, experts suggest that the two countries should draw up a common action plan to invest in a few strategic industrial sectors such as Energy and Digital economy.The governments intentions are good but France and Germany face different challenges. It will be difficult to make the economies of these 2 countries converge. However, inaction is not a viable option in the current state of Europe.

Post a comment

Please check that the information in the fields here below is correct.

Your comment is awaiting approval and will soon appear below!

Comments :

  • No comments


Stay Informed about the Latest News

Created by