27 January 2014

Statement by the French-German Economic and Financial Council (FGEFC)

The Franco-German Financial and Economic Council was founded in 1988. The members of the Council include the finance and economics ministers of the two countries as well as the governors of the French and German central banks. In preparation for European Monetary Union, the original aim of the Council was to enhance Franco-German cooperation on currency issues and international financial and economic questions. The groundwork for two decisions of historic importance was laid by the Council: the agreement on the Stability and Growth Pact and the creation of the Eurogroup in 1997.

Present: Wolfgang Schäuble, Sigmar Gabriel, Jens Weidmann, Pierre Moscovici and Christian Noyer

Since its last meeting, the French-German Economic and Financial Council notes that significant progress has been achieved regarding the implementation of policies in favour of strengthening of the EMU and boosting growth, jobs and competitiveness:

The euro area is making important progress in surmounting the crisis. The Compact for Growth and Jobs agreed in June 2012 remains one of the EU's major tools aimed at re-launching growth, investment and employment as well as making Europe more competitive. While substantial progress has been achieved in a number of areas, efforts should continue to ensure that the potential of the Compact is used to its fullest extent.

The significant progress made in the euro area with respect to fiscal consolidation is now bearing fruit, as debt levels are expected to peak in 2014 and to decrease from 2015 onwards. This, along with the ongoing recovery, illustrates that growth-friendly fiscal consolidation has been and remains a balanced and efficient strategy. The European Union budget will also contribute to the efforts to stabilise the economy, reflecting the stronger emphasis on expenditure aimed at boosting growth and creating jobs within the multiannual financial framework for the years 2014-2020.

Alongside the already adopted Single Supervisory Mechanism (SSM), reaching a final agreement on the SRM will represent a crucial step towards the completion of the Banking Union. A general approach and specific conclusions were reached by the EU Council on the Single Resolution Mechanism (SRM).

The FGEFC has further agreed on:

• the necessity to pursue efforts by France and Germany to foster growth an employment, through sound and consistent national economic strategies, an appropriate fiscal stance and through determined implementation of the 2012 compact for growth and jobs;

• the need for an EU-wide initiative to separate speculative activities from other banking activities, while preserving the existing European universal banking model, following largely the findings and recommendations by the High-Level expert group chaired by Governor Liikanen;

• the priority that should be given to reaching a final agreement on the Single Resolution
  Mechanism before the end of the current legislative cycle. France and Germany will work actively to ensure swift progress both on the finalisation of the intergovernmental agreement and on the discussions with the European Parliament on the SRM Regulation on the basis of the general Approach reached by the Council in December;

• that France and Germany will make joint proposals to reach a compromise on a common scheme of taxation for financial transactions, within the next months, with all their partners from the enhanced cooperation. The target is to ensure a fair contribution of financial markets to tax revenues, improving financial stability and harmonising national legislations while fully preserving monetary policy mechanisms and funding to the economy.

Full press release

© Ministère de l'Economie et des Finances