France declares austerity over as Germany offers wiggle room

‘Certain Flexibility’

There is a “certain flexibility” in allowing France, as well as Spain, to meet its deficit targets, Schaeuble told the Bild am Sonntag newspaper in an interview published yesterday. “This comes with clear conditions for the necessary reforms. The commission will make concrete proposals by the end of May which then will be discussed and decided upon among the euro area finance ministers.”

Mindful of a potential backlash from German voters in an election year, calls by senior coalition lawmakers like Barthle for euro area members to stick to the euro’s deficit rules may limit Merkel’s ability to help France.

“I can understand why certain conservatives in Germany are unhappy about this,” Moscovici said today on France’s i-Tele cable-news channel. “For them it’s not an ideological success. But Germany and France have a common responsibility in Europe. Germany needs a France that is successful.”

At the same time, Hollande pressed Merkel to overcome the demands of electioneering to keep the euro area’s campaign to shore up its finances by keeping the march toward a banking union on track.

“Ms. Merkel has upcoming elections in September, and cannot give the impression that she’s taking greater care of Europeans than of Germans,” Hollande said in a May 3 interview with The Wall Street Journal. “The risk is that Germany may want to wait until after its elections to move ahead on the banking union.”

Bloomberg News

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