\t\t\t\t\t\tEmail\t\t\t\t\t\tShare on Email\n\t\t\t\t<\/li>\n<\/ul>\n
![\"Business](\"https:\/\/www.europesays.com\/uk\/wp-content\/uploads\/2025\/10\/GettyImages-2225840051.jpg\")
\t\tBERLIN, GERMANY \u2013 JULY 23: German Chancellor Friedrich Merz and French President Emmanuel Macron talk to media prior to talks at Villa Borsig on July 23, 2025 in Berlin, Germany. The two leaders are meeting as Germany, France and the United Kingdom forge a stronger European alliance following U.S. President Donald Trump\u2019s disruption of transatlantic ties. (Photo by Christian Mang\/Getty Images)\t<\/p>\n
Despite growing economic strains and political turbulence in both countries, a potential alignment between Germany\u2019s centre-right Chancellor Friedrich Merz and a far-right French president could temporarily steady Europe\u2019s core \u2014 but deep fiscal and ideological divides between Paris and Berlin still threaten the long-term stability of the European Union and its single currency, says David Marsh<\/p>\n
A cornerstone of Europe over 70 years has been the depth of cooperation between France and Germany at the centre of the continent. The alliance within the European Community (from the 1990s, the Union) has often featured dissent and conflict \u2013 such as discord between Paris and Berlin about preparations for the Euro in 1999 as well as, more recently, by disagreement on nuclear energy, trade agreements with Latin America and joint activities to build fighter aircraft. In the last few days, a new spectre has loomed. France looks increasingly likely to vote for a politician of the extreme right as its next president \u2013 either in April 2027, if Emmanuel Macron lasts to the end of his second term or conceivably earlier if the latest French government crisis results in France\u2019s president standing down and calling early elections.\u00a0<\/p>\n
Might this lead to a European catharsis? My view is that we are heading for stormy waters but not a complete shipwreck \u2013 at least, not for the time being. Friedrich Merz, Germany\u2019s centre-right Christian Democrat chancellor since May 2025 \u2013 who has already had to forge links with two failed French Prime Ministers during his brief time in office \u2013 would almost certainly get on reasonably well with a far-right figure in the Elysee Palace.\u00a0<\/p>\n
Merz is a hard-headed politician. His rationale is built around trying to withstand the rise of the Alternative for Germany (AfD), the far right anti-Euro and anti-immigration grouping in Germany which has become the second biggest parliamentary party. He has inaugurated a much tougher policy on migrants, building on border control ideas suggested 10 years ago to previous Christian Democrat chancellor Angela Merkel, which she rejected on both legal and moral grounds. Merz\u2019s policies on immigration , and his steely demeanour on law and order and discipline in state finances, have some appeal to voters on the right who feel disenfranchised by mainstream parties, including the Social Democratic Party with which Merz is in fragile, low-majority coalition. This could slow or even reverse the meteoric ascent of the AfD.\u00a0<\/p>\n
Germany\u2019s stalling economy<\/p>\n
Against a rocky German economic background \u2013 with growth stalling badly following six years of stagnation \u2013 Merz has won support for his steady approach to foreign policy. But the domestic picture remains disquieting. Large-scale fiscal expansion for defence and infrastructure agreed at the outset of his chancellorship is taking far too long to work through. According to statistics released on 8 October, German industrial production fell to 2005 levels in August as output in the pivotal car sector tumbled 18.5 per cent from July. The news came on the eve of a Berlin \u2018automobile summit\u2019 between Merz and car company chief executives on Thursday to find ways to revitalise the hard-pressed industry.\u00a0\u00a0<\/p>\n
On the European front, Merz has healed some previous fractures with\u00a0 France in the symbolic area of nuclear energy, assembled a working relationship with Donald Trump in the White House, produced leadership over Germany\u2019s backing for Ukraine over the war with Russia, and forged a much-needed link with the UK in economics, trade and defence. The appearance of a leading figure from Marine Le Pen\u2019s far-right National Rally party \u2013 either Le Pen herself or (should she be impeded by her five-year ban from running for office, against which she is appealing) Jordan Bardella \u2013 might, if Merz is lucky, strengthen his credentials as a seasoned political operator who can do business with a range of awkward foreign leaders.\u00a0<\/p>\n
In view of the stigma of the rise of National Socialism in Germany in the 1930s and the ravages of the second world war, the barriers towards electing AfD leader Alice Weidel as the next German chancellor are much higher than those facing an RN leader en route to the Elysee Palace. The combination of a right-of-centre chancellor in Berlin and a far-right leader in Paris might even emerge as a relatively stabilising force. The key would be whether they can agree a constructive European economic policy that puts growth firmly back on to the agenda.\u00a0\u00a0<\/p>\n
A central problem in Franco-German relations will however remain. The French budget deficit appears out of control at over five per cent of gross domestic product, well above the basic benchmark of three per cent \u2013 veering ever more away from European principles of balanced budgets. The yield on French government bonds, once considered the safest in the Euro area after German Bund issues, has risen this week to above Italian levels, showing the extent to which France has fallen out of favour with worldwide investors. France\u2019s budgetary malaise confirms my view in my book on Europe that the country is adding to the continent\u2019s myriad fault lines. The single most damning indicator of insidious Franco-German strains concerns divergences over public debt. The French have been profligate while Germany has practised fiscal orthodoxy. The two countries\u2019 debt-to-GDP ratios were virtually identical in 2007, just before the global financial crisis, but France\u2019s has nearly doubled since then while Germany\u2019s (after rising in subsequent years and then falling back) has remained unchanged. According to the elder statesman of European finance, Niels Thygesen, the 90-year-old Danish economics professor, for eight years chairman of the European Fiscal Board monitoring European public sector finances, \u2018France has replaced Italy as the major problem country within the euro area.\u2019<\/p>\n
Macron\u2019s ploy of reasserting a grip on elections on state finances by dissolving parliament in June 2024 and calling early National Assembly backfired spectacularly. It resulted in a hung parliament , a run of three failed prime ministers and intensified political discord over bringing down the deficit. Edouard Philippe, a moderate conservative , mayor of Le Havre and Macron\u2019s prime minister in 2017-20 , warned this week that new parliamentary elections would bring anther hung assembly and deepen the crisis \u2013 leading calls for Macron to step down early.
If the RN comes to power in Paris, its leaders \u2013 taking a cue from Georgia Meloni, head of the far-Right Brotherhood of Italy party, Italian prime minister since 2022 \u2013 would be unlikely to espouse overblown nationalistic policies outlined during years in opposition. Departure from the euro or even full exit from the EU would not be part of the RN\u2019s initial agenda. Instead the French far-Right would try to capitalise on Germany\u2019s need for European cohesion and press for further relaxation of debt rules, more joint European borrowing and even a bail-out from Germany. In view of his enormous domestic constraints, these are requests which Merz would have to reject. Europe\u2019s single currency is the single most visible achievement of the European Union. But Franco-German squalls could, over time, build up into a potential existential threat for the EU\u2019s flagship project.\u00a0<\/p>\n