Macron’s honeymoon is OVER: Germany says French plans for EU would WEAKEN eurozone

The French President is pushing for ambitious overhauls to the Eurozone, including the creation of a large common budget and the appointment of a European Finance Minister.

He warned yesterday member states only had one year before the 2019 European Parliament elections to sort out his so-called pressing reforms.

Last month his ally and German Chancellor Angela Merkel suggested the plans were a “good basis” for negotiations.

But now, just weeks later, she warned that reforming the eurozone should not be the top priority and the debate should be more inclusive.

She told German media more time was required to examine Mr Macron’s proposals.

The German finance ministry has circulated its own blueprint, tearing up some of Paris’ priorities for the Brussels bloc.

Wolfgang Schauble, Germany’s finance minister, handed out his own proposals to fellow politicians at a meeting in Luxembourg on Monday, where he outlined the German position on euro area reform.

And the new paper, titled “Paving the way towards a Stability Union”, seems to have raised doubts in Macron’s vision.

Diplomats said the blueprint had exposed faultiness in the debate – particularly in relation to the treatment of foreign debt in crises.

The paper argues for a “predictable debt restructuring mechanism” that would mean bailouts from the European Stability Mechanism would come with the “obligation to carry out comprehensive debt restructuring if this is necessary to ensure debt sustainability”.

And the report said Mr Macron’s plan for a common euro area budget to help countries in crisis is “economically not necessary for a stable monetary union”.

Instead, measures to encourage countries and banks to be more responsible in managing their finances should be explored, the paper suggests.

But the proposals have strained tensions between Germany and France, as Paris is against any system that could lead to “automatic” debt write-downs.

Bruno Le Maire, France’s finance minister, said: “It is a real red line for the French government because we think that it could weaken the eurozone and sow doubt among investors.”

And he added that help from the euro area’s bailout fund should always be conditional on a government’s restructuring its debt and better managing its economic situation.

However Mr Le Maire also said that disagreements between the two allies were not unusual and that talks on euro area reform could still advance.

He added: “There is a difference in views, but it does happen that we have differences of view with Germany, and at the end of day we always find a compromise.”