German, French views to clash in Berlin

Germany and France will try to reconcile divergent visions of how to fix Europe's economy on Monday when Manuel Valls makes his first visit to Berlin as French prime minister and holds talks with Angela Merkel.

The trip comes at a watershed moment, with the region struggling to shake off the aftermath of a prolonged financial crisis that has left its citizens poorer, increasingly jobless and turning to extremist politicians for answers.

But the risk is that Valls and Merkel talk past each other: the Frenchman urging a dash for growth and understanding from Berlin on France's broken fiscal promises, and the German leader asking the politically impossible of Paris on budgetary rigor and reform.

The outcome of their one-hour lunch in Merkel's chancellery will be scrutinized in other euro-zone capitals – not least in Athens, Dublin, Portugal and Madrid, where leaders have played by the European Union rule book and subjected their countries to genuine austerity.

A decade ago, past leaders of Europe's two largest economies reneged on promises to rein in their public deficits - a transgression some say undermined the bloc's rules on budget discipline and helped set the stage for its sovereign debt crisis five years later.

The difference is that Berlin gradually went about bringing its fiscal house into order, imposing wage moderation and enacting controversial labour reforms. France largely stood still - and missed at least three more deficit targets.

Earlier this month it acknowledged that it would not bring its deficit down within EU limits until 2017. Initially, it had pledged to do so by 2013, before winning a reprieve until 2015.

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