Mrs Merkel’s cabinet is concerned that with the impending exit of the UK, the EU economic debate in the eurozone will shift in favour of France, Italy and other southern European nations.
These countries have long-held doubts over free markets and deregulation compared to the British-led northern lobby, pushing instead for a state-led approach, usually linked to an increase in public spending.
Germany’s leader feels this could undermine the EU’s competitiveness at a time of great challenges from emerging economies led by China, as well as pressure from populist president Donald Trump, according to the Financial Times.
Angela Merkel is worried about competitiveness after Brexit
Mrs Merkel also worries that while France’s socialist President has been able to bring together centre-left leaders for a number of joint political initiatives, the centre-right is far less coherent.
The German Chancellor also wants her country to be well-positioned for economic debate with the winner of the upcoming French presidential election.
Emmanuel Macron, the centre-left favourite in the current opinion polls, has promised market-orientated reforms, although Berlin is on edge to see if he presses the Eurozone to relax fiscal rules which would see a sharp rise in public borrowing.
Brexit Negotiations: Britain's sternest enemies
Tue, April 4, 2017
According to a new index, the EU27 countries fall into three groups: hard-core, hard and soft. These are the countries with the highest scores which indicate a fairly strong opposition to Britain’s position
1 of 7
France has the highest score in the index at 32.5
Get Quotes on Home Insurance
Mrs Merkel made her feelings clear at last month’s annual conference of the European People’s Party – the EU centre-right bloc in which she is the most powerful national leader.
At the meeting, she said: “We are against public spending policies which can boost growth in the short term but which produce, in the long term, inflation, loss of competitiveness, unemployment and poverty.”
With Berlin reluctant to push itself forward as the leader of the liberal states for fear of being seen as a dominator in the EU, Angela Merkel fears complicating her long-standing role as the union’s compromise-maker.
Her aim is also to maintain the France-Germany relationship – seen by many to lie at the heart of the entire European Union.
The aim is to maintain the France-Germany relationship post-Brexit
However, Germany’s job is becoming increasingly difficult, as it sees no other economically liberal member state being a match for the UK’s economic and political weight.
Berlin’s remaining allies are much smaller — Sweden, Finland and the Baltic states.
Poland has a similar outlook on economic policy but Warsaw’s nationalist Law and Justice government makes it a difficult partner on political grounds.
By contrast, France’s main economic policy ally is Italy, the third largest in population terms of the EU27 states.