September 27, 2017 / 11:34 AM / a year ago

Merkel ally tells Macron: 'Europe's problem is not lack of money'

BERLIN, Sept 27 (Reuters) - A close ally of Chancellor Angela Merkel on Wednesday poured cold water on French President Emmanuel Macron’s proposal to create a joint budget for the euro zone, urging member states to improve their competitiveness through structural reforms.

Macron offered a sweeping vision for a renewal of Europe in a speech on Tuesday, calling for the EU to cooperate more closely on defence, immigration, tax and social policy, and for the single currency bloc to have its own budget.

His proposals already drew mixed reaction from Germany’s pro-business Free Democrats (FDP) and the Greens, both possible partners in the coalition government Merkel will form after her centre-right Christian Democratic Union (CDU) won a Sept. 24 election albeit heavy losses.

In the first reaction to come from the CDU to Macron’s proposals, Eckhardt Rehberg, the party’s most senior member on the parliament’s budget committee, sounded a critical note.

“The problem in Europe is not a lack of money,” Rehberg told Reuters.

Rehberg pointed to already existing instruments to boost investments such as the European Union’s budget, the so-called Juncker fund (EFSI), the euro zone bailout fund (ESM) and the European Investment Bank (EIB).

“And not to forget the ECB’s monetary policy,” he added.

Rehberg said it was more important to discuss how existing funds could be used in a more efficient way and member states must implement reforms on their own to increase their competitiveness and to clean up their budgets.

“The taxpayers of other countries cannot relieve them of this duty,” Rehberg said.

Germany’s biggest industry association BDI urged Berlin to quickly find its own position on how to strengthen the EU.

“The proposals of the president are courageous, but not uncontroversial. Europe now needs speed in the reform discussion,” BDI managing director Joachim Lang said.

Macron’s proposals for a joint euro zone budget and a common finance minister for the 19-member bloc might not be perfect, but at least worth discussing, Lang added.

The head of Germany’s influential Ifo institute on Wednesday described Macron’s speech as an invitation for Germany to join the brainstorming process about the future of the bloc.

“A stronger EU would certainly make sense in the areas of foreign, defence and trade policy,” Ifo head Clemens Fuest said. “But Macron’s plans for the euro zone are wrong, from my point of view.”

Fuest said the problems in the euro zone would not be solved by the creation of a common finance minister or a joint budget for the 19-member bloc.

“It would be more important to ensure more stability in the financial sector and to reconcile liability and control in economic and financial policy,” Fuest added.

Fuest was among a group of top German and French economists who in a joint statement on Wednesday made a call on Paris and Berlin to shift their stances on EU reforms. (Reporting by Michael Nienaber; Editing by Raissa Kasolowsky)

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