Merkel Is Said to Plan Early Macron Visit to Advance the EU

(Bloomberg) -- French President Emmanuel Macron’s wait for a fully empowered partner in Berlin is about to end as Angela Merkel plans a post-inauguration trip to Paris for as early as next week.

With Germany’s government coalition in place and Merkel poised to begin her fourth term on March 14, tradition calls for the re-elected chancellor to make the French capital her first port of call. What’s less clear is how Merkel and Macron can mesh differing priorities and modernize the continent’s two biggest economies, strengthen the euro and contain risk after Italy’s inconclusive vote.

Merkel Is Said to Plan Early Macron Visit to Advance the EU

Responding to Macron’s push to remake European policy on everything from immigration to bank resolution is Merkel’s top priority for now, according to a person familiar with her thinking. She’s expected to lay out her views in a speech to the German parliament and at a European Union summit on March 22-23 that both leaders will attend, the person said.

“Europe will be Merkel’s next big topic,” and that includes “making overtures to France,” Clemens Fuest, head of the Ifo economic institute in Munich, said last week.

Germany’s political stalemate ended Sunday when the Social Democrats extended the coalition with Merkel’s Christian Democratic-led bloc that’s governed since 2013. With both parties at electoral lows, Merkel’s leeway to challenge her party’s aversion to risk-sharing in the euro area looks even more limited than before.

American Realities

The government’s policy blueprint suggests Germany remains focused on euro-area fiscal stability, Moody’s said in a note to clients on Tuesday. “While Europe plays a prominent role in the coalition treaty, we do not expect a material change in Germany’s position on European policy.”

President Donald Trump’s push to upend decades of U.S. economic policy and risk a trade war with the European Union may add pressure for Berlin and Paris to draw closer.

Merkel wants to speed up a push to align French and German corporate tax rates in response to the Trump administration’s $1.5 trillion tax cut. “The realities we are seeing in America will enter into the calculation,” she said in her weekly podcast on Sunday.

Macron, 40, has an ally in Germany’s Social Democrats, who have pressed Merkel to fully embrace his proposals for the euro area. They include a French-Italian push for a fiscal backstop to cushion economic shocks.

Battle Lines

Yet battle lines are being drawn as Merkel, 63, extends her 12 years in power. Northern
countries including Finland, Ireland, the Netherlands and the three Baltic nations want a lid on EU reforms, saying this week that strengthening the euro “requires first and foremost decisive actions at the national level.”

In Berlin, Merkel faces little voter pressure for reforms after Germany’s economy grew in 2017 at the fastest pace in seven years.

Improving the conditions for growth ranked last on a list of eight top public concerns, which was led by education, external security, social equality and crime, according to a March 4-5 Forsa poll for broadcaster RTL.

How Ambitious?

Officials in Berlin and Paris said the date for Merkel’s post-inaugural meeting with Macron isn’t set. In 2013, she visited then-President Francois Hollande a day after her inauguration.

On her last visit to Paris in January, Merkel said her coalition pact leaves wiggle room to negotiate solutions with Macron.

“We really have to find out how ambitious we are,” Macron said.

©2018 Bloomberg L.P.