05 June 2013

Gerhard Schröder: France should copy Germany's reforms to thrive

Writing for the FT, the former German chancellor says: "There are those who imagine Europe as a political union and those who think of Europe only as a single market, while the political process should remain largely national. Europe must decide between these two positions."

The case for European integration is not merely based on the question of war or peace – but on weakness or power. Only a united Europe can stand a chance in a globalised political and economic world. And our model can be a beacon and a blessing for the world: a role model for other regions, and a cornerstone of the world economy. 

In the debate over austerity and growth, we see a return of issues of 10 years ago. At the time, the then French president Jacques Chirac and I worked together to reform the European stability and growth pact. This reform did not weaken the criteria for budget deficits but gave more flexibility to a set of rules that was too rigid.

When the Commission gives countries such as France more time to meet the deficit criteria, this is comparable to the situation in Germany at the time of the Agenda 2010 reforms that I introduced in 2003-05. Without the pact’s reform, it would have been politically impossible to save billions of euros through budgetary cuts, and at the same time implement difficult and controversial labour market and social security reforms.

Today, many European countries, especially France, face similar challenges to the ones Germany did a decade ago. Structural reforms are necessary because of excessive debt, as well as demographic developments and international competition.

Staying ahead in competitiveness on a worldwide scale must be the priority for France and for Europe. From our experience with Agenda 2010, we learnt that it takes a few years for the effects to work through to producing visible success. I am confident that our friends in Paris will act accordingly. 

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