Paris-Berlin report says ‘freeze wages in France’

France and Germany are set to present a joint economic reform paper this week that proposes Paris would freeze wages, make the 35-hour week more flexible and Berlin would hike public investment, a news report said.

Paris-Berlin report says 'freeze wages in France'
The finance ministers of Germany and France - Wolfgang Schäuble and Michel Sapin - meet for an informal Franco-German conference earlier this month. Photo: AFP

Paris stressed that the proposals to be presented to both countries' economy ministers on Thursday is not government policy but merely "a report by two economists".

Under the proposals, France would make its labour rules, including the 35-hour week, more flexible in many sectors and seek to freeze wages for three years to make companies more competitive, reported Der Spiegel news weekly on Sunday

Germany would also double its infrastructure spending to 20 billion euros ($25 billion) by 2018, and the fast-ageing country would reform immigration rules and do more to get women into the workforce, according to the Spiegel report.

The road map plan for Europe's two biggest economies will be presented Thursday in Paris to German Economy Minister Sigmar Gabriel and his French counterpart Emmanuel Macron.

It is based on a government-commissioned study by Henrik Enderlein, head of the Jacques Delors Institute in Berlin, and Jean Pisani-Ferry, chief economic strategist of French Prime Minister Manuel Valls, said Der Spiegel.

A spokeswoman for the French economy ministry told AFP on Sunday that the plan does not represent proposals by the French and German governments but is "a report by two economists".

"This report is not finalised so it cannot be commented on at this stage," she added.

The proposals in the paper would represent a compromise between Berlin, which has long preached fiscal discipline in the crisis-hit EU, and Paris, which is grappling with high unemployment and a ballooning budget deficit and has been urging more stimulus spending.

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‘We want to move ahead’: Macron and Merkel to sign new Franco-German treaty

French President Emmanuel Macron and German Chancellor Angela Merkel will sign a new treaty with Merkel's spokesman saying France and Germany: "want to move ahead to ensure the security and wellbeing of citizens as well as a strong, sovereign and democratic Europe."

'We want to move ahead': Macron and Merkel to sign new Franco-German treaty
Photo: AFP

French President Emmanuel Macron and German Chancellor Angela Merkel will sign a new treaty on January 22 to further strengthen Franco-German cooperation in the run-up to next year's EU elections, Macron's office said Tuesday.

The two leaders, both of whom have been weakened domestically, will meet in the French border town of Aix-la-Chapelle to ink an accord “which will strengthen the already close ties between Germany and France,” the French presidency said.

Merkel's spokesman Steffen Seibert said the eurozone's two biggest economies “want to move ahead to ensure the security and wellbeing of citizens as well as a strong, sovereign and democratic Europe.”

The treaty will cover joint projects in the areas of defence, climate change and security as well as the sensitive issue of “economic and social convergence,” the French presidency statement said.

The meeting comes as Merkel enters the twilight of her rule and Macron attempts to defuse the “yellow vest” anti-government rebellion which has engulfed French cities over the past seven weeks.

The couple seen as the glue of the European project will meet in the town hall of Aix-la-Chapelle, former capital of the ninth-century Carolingian Empire, which laid the foundation for Germany, France and several other modern European countries.

The French and German parliaments will, on the same day, adopt a draft agreement on closer cooperation in the form of a 100-member joint parliamentary assembly, the French statement said.

France and Germany's ruling parties and their allies fear an unprecedented challenge from populists in May's European Parliament elections.

In his New Year's address Macron said he would set out his vision for a “renewed European project” in the coming weeks.

The 41-year-old centrist was elected on a promise to revolutionise the post-Brexit EU but Germany shot down his proposals for a huge common fund, with Berlin agreeing only to a limited budget to finance investment.