France and Germany, traditionally considered the driving forces of the European Union, went through a period of political and economic tensions that calmed not only their own recovery, but also the stability of the bloc as a whole. The lack of internal consensus in both countries, combined with their respective economic crises, creates a panorama of uncertainty that worries Brussels.
Although the French and German economies share structural problems, such as weak economic growth and high levels of deudation, the causes of their difficulties are distinct. However, there is a common factor that aggravates the situation: political polarization and the inability to form broad consensuses in a context of growing ideological fragmentation.
In Germany the situation is particularly complex. The current government led by Olaf Scholz encounters a level of contempt that it undoubtedly has its ability to manage effectively. Despite the executive's internal problems, its political rivals, the Christian Democrats of the CDU, also have enough mayor to govern alone, which forces them to consider alliances that, for now, are practically inviolable. The CDU has maintained a strict sanitary cordon to the leader of the Alternative for Germany (AfD), a party of extreme derecha with those who refuse to agree.
The only possible alternative for Germany seems to be the formation of an even more fragmented and polarized coalition, which includes Scholz's social democrats, the Verdes and perhaps the post-communists of Die Linke. However, this option is not subject to controversy and could deepen political tensions in the place where they are resolved.
In France the situation is no less worrying. Emmanuel Macron's party is encountering serious difficulties in governing an increasingly hostile political environment. Since the 2022 legislative elections, Macron has avoided pacts with traditional legal parties, which have limited his room for maneuver. On the other hand, any attention to Marine Le Pen's extreme right is politically insurmountable, given that the government is in a blocked position.
In addition to political paralysis, France faces serious economic problems, with a debt level and public deficit significantly higher than Germany's. The French economy finds itself trapped in a vicious cycle in which rising debt limits the government's ability to reduce the deficit, while the means of fiscal adjustment needed to stabilize public finances could dampen economic activity even further.
Economic projects for France are not exciting. According to the OECD World Economic Observatory, it is hoped that the increase in PIB francs will be only 1.1% in 2024, with a deceleration of 0.9% in 2025. Although the Olympic Games may provide an impetus time to private consumption in 2024, this effect will be insufficient to reverse long-term negative trends.
The French public deficit currently stands at around 6.1% of GDP, well below the 3% limit set by European regulations. Despite the government's efforts to consolidate public finances, the debt continues to increase and is hoped to reach 120% of GDP in 2026. This situation was raised by President Macron in promulgating a special law to broaden the conditions for 2024, a movement that seeks to avoid total government paralysis while a new presupuestary project is negotiated.
In this context, the tension between France and Germany is increasingly evident. Both countries face internal difficulties that prevent them from making progress in coordinating common policies within the European Union. For example, negotiations for the approval of the European prerequisites of 2025 were interrupted, which aggravated the economic and institutional paralysis in the bloc.
Germany, for its part, has also gone through a period of economic uncertainty. The lack of competitiveness of its sector, combined with very high energy prices and the deceleration of the Chinese economy, has seriously weakened the “locomotive of Europe”. According to the OECD, the German economy will register zero growth (0%) in 2024, with a moderate recovery of 0.7% in 2025.
The OECD has reported that Alenia's green and digital transformation is key to recovering competitiveness on a large scale. However, the country faces difficulties in implementing these reforms due to political fragmentation and the limitations supposedly imposed by its constitutional debt control mechanism.
In this scenario, Europe has started to show a relatively more solid model compared to France and Germany. Spain, for example, has converted into one of the developed economies with mayor growth in 2023, with a projection of 3% for this year and 2.3% for 2024. Furthermore, the Spanish government has reduced the public deficit below 3% of GDP, complying with European legislation.
Portugal has also shown significant progress, with an assumed subsidy of 0.4% of GDP in 2023 and a projected economic increase of 1.8% for 2024. Greece, for its part, reduced its deficit by 40 points since 2020. maintains a fiscal consolidation section which contrasts with the situation in France.
This change in the economic balance within the European Union substantiates the growing divergence between the Franco-Alemannic core and the south of the bloc. While southern countries have implemented structural reforms to stabilize their economies, France and Germany appear trapped in a cycle of political and economic stalemate.
The future of the European Union will depend on the ability of its two main economies to overcome this crisis. Without clear leadership from France and Germany, the bloc risks losing cohesion and effectiveness at a time when facing global challenges such as the energy transition, digitalisation and geopolitical tensions.
In the latter case, the economic and political recovery of France and Germany will be crucial to guarantee the stability and growth of the European Union in the coming years. However, the path towards this recovery appears to be full of obstacles, and an effort will be needed together with all actors involved to overcome current divisions and move towards sustainable solutions.
