Angela Merkel and Emmanuel Macron Aurelien Meunier/Getty Images

How to Renew the European Project

The French presidential and legislative elections earlier this year have instilled new hope in the European integration project, by raising the prospect of deeper Franco-German cooperation. And yet some forms of cooperation, not least shared-liability schemes, could do more harm than good.

BERLIN – The French presidential and legislative elections earlier this year have instilled new hope in the European integration project, by raising the prospect of deeper Franco-German cooperation. And yet some forms of cooperation, not least shared-liability schemes, would be a mistake. As long as member states have sovereignty over fiscal and economic policymaking, France and Germany should focus their efforts on making the eurozone itself more resilient.

French President Emmanuel Macron has started to pursue urgently needed reforms to boost economic growth, and it is crucial that he succeeds in this effort. France is suffering from high structural unemployment and low potential growth, and its public finances are unsustainable in the medium term. Improving this state of affairs will require factor- and product-market reforms, together with deep reductions in public-sector deficits.

From France’s standpoint, there is no better time than now to implement economic reforms. Although the eurozone is showing signs of a solid economic recovery, the European Central Bank is feeling increasing pressure to taper its ultra-expansionary monetary policies. Macron’s government thus has no time to lose, especially given that economic reforms can take time to deliver results, and the next elections are always just around the corner.

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