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Joined at the hip, but pulling apart? Franco-German relations, the Eurozone crisis and the politics of austerity

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Abstract

This article situates analysis of French macroeconomic policy developments under Hollande’s presidency within a wider context of macroeconomic policy autonomy under conditions of capital mobility, and the political economy of European economic governance. It focuses on the crucial Franco-German relationship because of its centrality to the evolution of the euro since its inception. The analysis unearths different state traditions informing the distinct economic ideas about austerity, economic policy, economic governance and regulation that underpin French and German visions for future European economic integration and European economic policy. It establishes the historical and ideational conditions of German approaches to European integration and European Monetary Union, and how these have shaped continuities within French European economic strategy, and Hollande’s approach to the architecture of the euro, focusing in particular on fiscal policy dimensions and their recent evolutions. The discussion explores the foundations of German veto power within European agreements by ‘kicking the tyres’ of the German ordo-liberal political economic settlement and its social underpinnings, finding evidence of corrosive tendencies of declining mass party support linked to anaemic output and productivity growth, rising inequality and deficient demand undermining German export surpluses. Yet, time is an important factor in politics, and these corrosive tendencies are unlikely to generate a change in Franco-German relations during Hollande’s Presidential tenure.

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Notes

  1. Cafruny (1990) has aptly called this ‘minimal hegemony’ in contrast to the immediate post-World War II ‘integral hegemony’ when the United States provided considerable material support to its allies (for instance through the Marshall Plan). The constellation remains hegemonic because of the extent that it still rests on consent.

  2. Interview with Senior Finance Ministry official, May 2013.

  3. Interviews with Senior French Finance Ministry officials, Paris, September 2013.

  4. L’agence S&P abaisse d’un cran la note de la France Le Monde.fr avec AFP et Reuters, 8 November 2013.

  5. 1 Finance Minister Moscovici’s communication to the French Cabinet, 27 February 2013, http://www.gouvernement.fr/gouvernement/la-strategie-de-finances-publiques.

  6. Interview with French economic policy advisor, November 2013.

  7. Interview with Senior French Finance Ministry official, May 2013. Interview with economic policy advisor, November 2013. Interview with Former Senior French Finance Ministry official, November 2013.

  8. With the Fiscal Compact, EDPs are activated automatically in the case of a breach and can only be suspended by the qualified majority vote in the Council. Germany was pushing for automaticity of sanctions.

  9. Interviews with IMF officials, French Finance Ministry officials and economic policy advisors, May, September and November 2013. As noted in the Eckert Commission of the French Parliament – which identified differing approaches among French authorities, let alone between France, the European Commission and its partners, http://www.assemblee-nationale.fr/14/pdf/rapports/r0244.pdf, pp. 49–50.

  10. Interviews with French Finance Ministry officials, September 2013.

  11. http://europa.eu/epc/working_groups/output_gaps_en.htm.

  12. Interviews with Finance Ministry senior officials and economic advisors, September 2013.

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Authors and Affiliations

  1. Department of Politics and International Studies Social Sciences Building, University of Warwick, Coventry, CV4 7AL, UK

    Ben Clift

  2. Department of European and International Studies, King’s College, London, UK

    Magnus Ryner

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Clift, B., Ryner, M. Joined at the hip, but pulling apart? Franco-German relations, the Eurozone crisis and the politics of austerity. Fr Polit 12, 136–163 (2014). https://doi.org/10.1057/fp.2014.8

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