Simmering Feud Between France and Germany Erupts Into Verbal Warfare; France Tells Brussels to Shove It

The simmering feud between France and Germany erupted into a heated political exchange following Pressure on Hollande to take bold action to revive the French economy, calling for new pension and labour market reforms.

"The commission’s list of recommendations for Paris, which it expects to be delivered in return for allowing France two extra years to meet its budget deficit targets, covered all the hard issues the socialist government faces: cutting public spending; restoring badly diminished competitiveness, opening up restricted markets, reforming the tax regime and loosening tight labour market regulations."

France Tells Brussels to Shove It

The exchange got quite interesting when Merkel Allies Bashed Hollande Over Needed Reforms

Leading members of Angela Merkel’s ruling Christian Democratic Union in Germany have fiercely criticised François Hollande, accusing the French president of “shaking the foundations of the European Union”, only hours before the two leaders met in Paris in a bid to repair their troubled relations.

Deep German concern about the French government’s resistance to economic reform and hostility to EU pressure emerged after Mr Hollande said it was not for the European Commission “to dictate” reforms to Paris.

“There is no need for European recommendations; what’s needed is obvious. It’s not for the commission to dictate what we have to do,” Mr Hollande said in response to the commission, whose call was part of its annual assessment of budget plans for all 27 EU members.

The French president’s “vehement criticism of the European Commission’s reform proposals . . . contradicts the spirit and letter of European agreements and treaties”, said Andreas Schockenhoff, a deputy chairman and foreign policy spokesman of the CDU in the German parliament. “Someone who talks like that is shaking the foundations of the EU.”

Norbert Barthle, budget spokesman of the CDU in the Bundestag, said the two-year extension granted to Paris in meeting the 3 per cent deficit target was more than Germany had expected.

“France won’t be able to bank on such indulgence again,” he added, saying that Mr Hollande had misunderstood the nature of European co-operation if he thought he could accept the benefit proposed by the commission but reject the conditions attached.

Reflections on the Obvious

Somehow it is OK for France to stipulate conditions on Greece, on Ireland, on Cyprus, on Portugal, and on Spain but not be told what to do itself.

Yes it is "obvious" what to do.

• Slash pension benefits
• Make it easier for companies to fire workers
• Lower taxes
• End agricultural subsidies
• Raise the retirement age

Jobless Claims at New Record High

The problem is Hollande cannot see the obvious. Meanwhile, inquiring minds note French jobless claims hit new record in April.

The number of people out of work in France hit a record high in April, the daily Les Echos said on Thursday, casting more doubt on President Francois Hollande's pledge to reverse a long-running rise in unemployment.

The number of registered jobseekers rose by about 40,000 in April from March's previous high, the financial daily reported ahead of the official publication of the figures later on Thursday. It did not quote its sources.

The government is holding to its pledge to turn around the trend by year-end despite multiple forecasts to the contrary, hoping that the economy will start to pick up in the second half of 2013 and that subsidised jobs will help keep a lid on unemployment.

The European Commission, the OECD and France's own jobless benefit fund all see unemployment continuing to rise through 2014. The EU executive said on Wednesday it expects French unemployment to reach 10.6 percent this year after 10.2 percent last year and keep increasing to 10.9 percent in 2014.

"Obviously Obvious"

The odds of a major economic recovery in France in 2013 with socialists in control are essentially zero, and subsidizing jobs is the wrong approach in the first place. Both of those statements are "obviously obvious", except to socialist fools and Keynesian clowns.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com