Conversely, France has a bad reputation, with a budget regularly in deficit since 1975. However, it was from the mid-2000s onwards that the budgetary trajectories of the two countries clearly diverged, which can be measured through the budget balance and the level of public debt.

However, in the context of multiple crises that Europe is experiencing since the euro zone crisis in 2010, until the Ukrainian war in 2022, including the Covid-19 pandemic, the consequences of the management of public debt translates differently in each country. The assessment should be more nuanced though with regard to the effects produced by the pursued political decisions:

On the German side, too little public investment is currently weighing on the quality of infrastructure, particularly in energy and transport, but also the operational level of the Bundeswehr. As a result, surpluses have amounted which were based on a growth model, highly exposed to international risks, and a reluctance to strengthen the coordination of economic policy at the European level.

As for France, its budgetary vulnerability has recently particularly accrued, marked by weak growth and a sharp increase in interest rates, after a long period of zero or even negative rates.

While the financing needs are considerable in both countries and in Europe as a whole, to complete the energy transition, relocate certain production and strengthen defense, what budgetary policy measures should Germany and France take? What are the possible points of convergence? Compromises are essential to ensure the reform of the Stability and Growth Pact and, beyond that, to ensure better governance of European economic policy.

• This note was written in partnership with the Jacques Delors Institute, a European think tank.

Dr. Andreas Eisl is a Research Fellow in European Economic Policy at the Jacques Delors Institute and an Associate Researcher at the Paris Institute for Policy Studies (Sciences Po).

This publication is also available in French and German (pdf):

FRENCH: Politique budgétaire en France et en Allemagne : des divergences insurmontables ? 

GERMAN: „Unüberwindbare Divergenzen in der Haushaltspolitik Deutschlands und Frankreichs?“