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THE LOCAL'S MEDIA ROUNDUP

ELECTION

‘European axis has to be readjusted’

Francois Hollande was elected French president on Sunday, denying Nicholas Sarkozy a second term and rattling the relationship between France and Germany. As The Local’s media roundup discovers, many predict a bumpy start to the new constellation.

'European axis has to be readjusted'
Photo: DPA

Relations between German Chancellor Angela Merkel and now ex-President of France, Sarkozy were very close, with Merkel campaigning for her conservative brother-in-arms.

But now socialist Hollande will take his place in the spotlight of European politics after snagging 3.4 percent more of France’s votes. Merkel immediately invited him for a visit, but also flexed her political muscles, telling the press that the Germany-led European austerity programme was not up for discussion.

One of Hollande’s main election campaign points was to change the austerity pact imposing strict austerity measures on financially flailing EU member states such as Greece. He wants increased government spending to encourage economic growth.

The future of the Germany’s friendship with France is being dissected by German press, with some pushing for the two to put their differences aside in the name of the greater good.

Regional newspaper the Frankfurter Rundschau suggested that the French election had forced the German people to consider their country’s role in Europe and made them more European in the process – whether they liked it or not.

The election was so important, the paper said, that Merkel was more concerned about it than the reduction of her power at home as her Christian Democratic Union haemorrhaged votes on the same day in the state election in Schleswig Holstein.

Bavarian paper the Münchner Merkur was less diplomatic, saying that France and Greece – whose far-right party won a bucketful of seats on Sunday – had opted to bow out of the “iron austerity chancellor’s plan for Europe, without showing any alternative.”

France, the article added, had set itself on “the crazy path of socialism.” And Greece had chosen ultra-conservatism, as the neo-Nazi party “Golden Dawn” won seven percent of the country’s votes, putting them on course for at least 20 seats in parliament.

The Darmstädter Echo echoed the Merkur’s sentiments, saying that France had declared war against Merkel and her financial policies by voting in Hollande. The axis on which Europe was spinning “has to be readjusted,” it concluded.

Over in eastern Germany, the Sächsiche Zeitung took a broader look at relations between the two leaders. It, like much of the German press, stressed the importance for Merkel and Hollande to find common ground, and that “there is enough room for compromise” between their ideas.

In the national press, Die Welt mused over how it would take some time before the future of Franco-German relations becomes clear. The vote signalled a dissolving of an unofficial coalition and that if no compromise can be found, the risk of France creating a union with southern European countries – out of sight of Germany – could become real.

Weekly magazine Der Spiegel threw Greece into the mix, suggesting the chaotic situation and the steady rise of the far-right should be reason enough for France and Germany to try particularly hard to find common ground, and work together.

“Hollande will be a difficult partner for Merkel, but he will find out that she can be difficult too,” the article said, adding that working against each other would not be a good idea for either.

Meanwhile, the Frankfurter Allgemeine Zeitung eased off Merkel and turned to Hollande himself, pointing out that it was his sheer “persistence” that pushed him to the top and that the new president would be thrown straight into the deep end – with a G8 meet-up and a NATO summit looming, Hollande has just a few days to get settled into his new role.

The Local/jcw

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ECONOMY

‘Turning point’: Is Germany’s ailing economy on the road to recovery?

The German government slightly increased its 2024 growth forecast Wednesday, saying there were signs Europe's beleaguered top economy was at a "turning point" after battling through a period of weakness.

'Turning point': Is Germany's ailing economy on the road to recovery?

Output is expected to expand 0.3 percent this year, the economy ministry said, up from a prediction of 0.2 percent in February.

The slightly rosier picture comes after improvements in key indicators — from factory output to business activity — boosted hopes a recovery may be getting under way.

The German economy shrank slightly last year, hit by soaring inflation, a manufacturing slowdown and weakness in trading partners, and has acted as a major drag on the 20-nation eurozone.

But releasing its latest projections, the economy ministry said in a statement there were growing indications of a “turning point”.

“Signs of an economic upturn have increased significantly, especially in recent weeks,” Economy Minister Robert Habeck said at a press conference.

The ministry also cut its forecast for inflation this year to 2.4 percent, from a previous prediction of 2.8 percent, and sees the figure falling below two percent next year.

READ ALSO: Can Germany revive its struggling economy?

“The fall in inflation will lead to consumer demand — people have more money in their wallets again, and will spend this money,” said Habeck.

“So purchasing power is increasing, real wages are rising and this will contribute to a domestic economic recovery.”

Energy prices — which surged after Russia’s 2022 invasion of Ukraine — had also fallen and supply chain woes had eased, he added.

Several months ago there had been expectations of a strong rebound in 2024, with forecasts of growth above one percent, but these were dialled back at the start of the year as the economy continued to languish.

‘Germany has fallen behind’

But improving signs have fuelled hopes the lumbering economy — while not about to break into a sprint — may at least be getting back on its feet.

On Wednesday a closely-watched survey from the Ifo institute showed business sentiment rising for a third consecutive month in April, and more strongly than expected.

A key purchasing managers’ index survey this week showed that business activity in Germany had picked up.

And last week the central bank, the Bundesbank, forecast the economy would expand slightly in the first quarter, dodging a recession, after earlier predicting a contraction.

German Economics Minister Robert Habeck

Economics Minister Robert Habeck (Greens) presents the latest economic forecasts at a press conference in Berlin on Wednesday, April 24th. Photo: picture alliance/dpa | Michael Kappeler

Despite the economy’s improving prospects, growth of 0.3 percent is still slower than other developed economies and below past rates, and officials fret it is unlikely to pick up fast in the years ahead.

Habeck has repeatedly stressed solutions are needed for deep-rooted problems facing Germany, from an ageing population to labour shortages and a transition towards greener industries that is moving too slowly.

“Germany has fallen behind other countries in terms of competitiveness,” he said. “We still have a lot to do — we have to roll up our sleeves.”

READ ALSO: Which German companies are planning to cut jobs?

Already facing turbulence from pandemic-related supply chain woes, the German economy’s problems deepened dramatically when Russia invaded Ukraine and slashed supplies of gas, hitting the country’s crucial manufacturers hard.

While the energy shock has faded, continued weakness in trading partners such as China, widespread strikes in recent months and higher eurozone interest rates have all prolonged the pain.

The European Central Bank has signalled it could start cutting borrowing costs in June, which would boost the eurozone.

But Habeck stressed that care was still needed as, despite the expectations of imminent easing, “tight monetary policy has not yet been lifted.”

In addition, disagreements in Chancellor Olaf Scholz’s three-party ruling coalition are hindering efforts to reignite growth, critics say.

This week the pro-business FDP party, a coalition partner, faced an angry backlash from Scholz’s SPD when it presented a 12-point plan for an “economic turnaround”, including deep cuts to state benefits.

Christian Lindner, the fiscally hawkish FDP finance minister, welcomed signs of “stabilisation” in the economic forecasts but stressed that projected medium-term growth was “too low to sustainably finance our state”.

“There are no arguments for postponing the economic turnaround,” he added.

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