Tension grows in most crucial EU relationship

FRENCH President Francois Hollande and German Chancellor Angela Merkel promised unity on a range of issues in a conference yesterday, but conflict bubbled below the surface.

Both leaders backed the idea of a full-time head for the Eurogroup and confirmed agreement on issues around deficit reduction and structural economic reforms.

Jeroen Dijsselbloem, the current Eurogroup president is also a minister in the Dutch government, and has been criticised for his handling of the banking crisis in Cyprus.

On Wednesday, Hollande expressed exasperation at the EU’s financial strictures, saying: “the European Commission cannot dictate what we should do, it can only say that France must balance its public finances”.

German political figures in both governing parties hit back after the President’s remarks. Andreas Schockenhoff, a senior member of Merkel’s Christian Democratic Union commented: “Hollande’s severe reaction shows considerable desperation”, adding: “his government has still not found effective answers to the economic and fiscal problems of their country”.

On Wednesday, the European Commission extended the period of grace for France to reduce its budget deficit to three per cent of GDP. Hollande now has until the end of his term in 2016 to reach the target, but the Commission stressed that the extra time should also be used to implement structural alterations.

The German Chancellor also emphasised the need for liberalisation along with a deferred timeline for austerity measures: “These go hand in hand”. Hollande maintained that France’s reforms were ongoing, using changes to public pensions to be completed this year as an example.

In a brief embarrassing moment in front of the press, Merkel referred to Hollande as Francois Mitterand, the deceased French President with whom he shares a first name.