February 8, 2018 / 9:57 AM / 4 months ago

German coalition clears path for convergence on euro zone - France's Le Maire

PARIS (Reuters) - Germany’s coalition agreement this week opens the way for convergence with France on reform of the euro zone, French Finance Minister Bruno Le Maire said on Thursday.

French Finance Minister Bruno Le Maire attends an interview with Reuters during the World Economic Forum (WEF) annual meeting in Davos, Switzerland January 25, 2018. REUTERS/Denis Balibouse

German Chancellor Angela Merkel’s conservatives and the centre-left Social Democrats (SPD) reached agreement on Wednesday on the policy platform for a coalition government.

While the deal brings to an end months of negotiations that have stymied German politics, the SPD’s roughly 464,000 members still have a chance to veto the agreement.

“There are things in the coalition agreement that are very positive and correspond with what the president of the republic has always defended on the euro zone,” Le Maire told a capital markets conference in Paris. “We have a real possibility of convergence with Germany.”

Le Maire has singled out as priorities the completion of the euro zone’s banking and capital markets union, and agreeing common rules in France and Germany for calculating corporate tax. He said he wants to reach agreement with Berlin by June.

French President Emmanuel Macron has in the past been even more ambitious, talking about the need for the eurozone to have its own budget and finance minister, and for the currency bloc’s rescue fund, the ESM, to be turned into a mechanism for helping member states pre-empt threats of financial instability.

Germany has so far had reservations that pushing further on a banking union could expose its taxpayers to losses at banks in southern Europe, where some lenders’ balance sheets - particularly in Italy - are burdened by bad loans.

Le Maire said France was prepared to accept measures that would reduce the risk of bad loans in countries like Italy, but that Germany also had to make concessions.

“I’m calling on our German friends to understand that there won’t be banking union without a minimum of solidarity between euro zone states,” he said.

As for France, he said Paris would reject any “automatic mechanisms” built into the euro zone’s rules that would prevent politicians from taking all final decisions, an apparent hint that the EU’s executive Commission should have less say.

Reporting by Leigh Thomas and Yann Le Guernigou; Editing by Ingrid Melander and Raissa Kasolowsky

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