French President Emmanuel Macron on Thursday pushed Germany to step up commitments to the eurozone with more investment as he met with Chancellor Angela Merkel, saying Berlin has benefited from a dysfunctional currency bloc and the weakness of other economies.
The French leader said the eurozone has deepened disparities, loading indebted nations with yet more debt and making competitive countries even more competitive.
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France's public debt stands at more than 96% of economic output, compared with 68.3% in Germany at the end of last year. Unemployment is above 9% in France but closer to 4% in Germany.
Mr. Macron is calling for a shared eurozone budget that could be used to for a variety of reasons, including helping currency members in economic distress, believing that would help address flaws revealed by the 2010 debt crisis.
"Germany has benefited from these malfunctions of the eurozone. This situation is not healthy because it is not sustainable," Mr. Macron said in an interview with French regional paper Ouest France and the German Funke Media Group.
For the eurozone to have a future, the French leader said, it must have "powerful solidarity mechanisms."
Mr. Macron's leaning on Germany is his latest salvo in an attempt to strike a new deal for the eurozone.
As part of France's side of the bargain, the 39-year-old has set in motion a fast-track parliamentary procedure to loosen France's rigid labor laws and is taking austerity measures to bring the country's deficit within European rules. Berlin has long called for such policies, but successive French governments have resisted when confronted with street protests and political opposition in France.
"Germany has to shift, like France has to shift," Mr. Macron said in the interview.
The French leader said Germany should assist with a stimulus of public and private investment in Europe and work with France to find "the right macroeconomic plan."
Ms. Merkel has signaled Germany is open to Mr. Macron's ideas on changing how the eurozone works. But she has also expressed caution about Germany underwriting the liabilities of countries she says should accept their responsibilities on a national level.
Ms. Merkel instead puts greater emphasis on countries harmonizing their tax regimes and labor laws.
"A standstill in Europe is close to being a setback," Ms. Merkel said at a news conference after meeting Mr. Macron. "In this respect, we need a dynamic, and part of this is economic convergence of eurozone member states as much as instruments that help make us independent."
At the news conference, Mr. Macron stepped back from criticism of Germany's competitive advantage in the eurozone, saying his comments in the French press were reported ambiguously. Instead, he stressed that Germany implemented economic overhauls 15 years ago from which the country is now benefiting.
"In our relationship, we give lessons to nobody," Mr. Macron said.
Ms. Merkel said, "We have the utmost interest in all countries of the eurozone and the European Union being strong. That's why we follow French reforms with great interest [...] and with the hope that France will emerge stronger."
The two leaders were meeting in Paris Thursday as part of an annual Franco-Germany cabinet meeting. Before sitting down with ministers, Ms. Merkel and Mr. Macron visited a center for promoting exchanges between young French and German people.
The two leaders participated in language learning games, introducing themselves in each other's languages and fielding questions on topics from rules banning headscarves in French schools to teaching languages to refugees.
"Tensions are always born from misunderstandings. Learning languages enables us to lift those misunderstandings," Mr. Macron said.
--Andrea Thomas in Berlin contributed to this article.
Write to William Horobin at William.Horobin@wsj.com
(END) Dow Jones Newswires
July 13, 2017 12:57 ET (16:57 GMT)