German Chancellor Angela Merkel has come out against handing the European Commission more powers, in the clearest sign yet that she is reining in her ambitions to create a "fiscal union" in which euro members cede control of their budgets to Brussels.
The comments come days after Merkel held talks with President François Hollande in Paris and the two unveiled joint proposals for the future shape of the euro area, including the creation of a permanent president of the Eurogroup forum of finance ministers. Merkel spoke out strongly in favour of closer fiscal integration last year, but France and some other euro members have deep doubts about ceding sovereignty -- a step which would require politically sensitive changes to the EU treaty -- and Berlin appears to have realised that this resistance is too great to overcome for now.
"We are thinking for example of the labour and pension markets but also of tax and social policy. Economic policy coordination in Europe is far too weak, it must be strengthened and this is rather different to giving more competences to Brussels", Ms Merkel said.
Merkel made clear that France must deliver on reforms prescribed by the European Commission in exchange for granting Paris two extra years to hit deficit reduction targets. Merkel also poured cold water on the idea of directly electing the president of the European Commission in an EU-wide vote. She and other members of her government, including Schäuble, voiced support for this idea in the past but she told the magazine such a step risked upsetting the balance of the bloc.
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