(Reuters) – German Finance Minister Wolfgang Schaeuble has asked a panel of advisers to look into reform proposals for France, concerned that weakness in the euro zone’s second largest economy could come back to haunt Germany and the broader currency bloc.
Two officials, speaking on condition of anonymity, told Reuters this week that Schaeuble asked the council of economic advisers to the German government, known as the “wise men”, to consider drafting a report on what France should do.
Schaeuble’s request denotes growing concern in Berlin and among private economists over the health of the French economy, which is set to miss a European Union goal for reducing its public deficit next year.
“Concerns are growing given the lack of action of the French government in labor market reforms,” Lars Feld, an economist who sits on the panel, told Reuters.
Although Schaeuble raised the prospect of a report on France with members of the council this week, Feld and the finance ministry made clear that the government had not submitted a formal request. The ministry declined comment on the minister’s “unofficial discussions” in general.
French President Francois Hollande’s office declined to comment.
Economists said Hollande’s reforms were sending the correct signal but may not be enough. Unlike European peers Italy and Spain, France’s borrowing costs have remained low, but there is a growing concern that its rock-bottom bond yields do not reflect the fragility of the economy.
“The biggest problem at the moment in the euro zone is no longer Greece, Spain or Italy, instead it is France, because it has not undertaken anything in order to truly re-establish its competitiveness, and is even heading in the opposite direction,” Feld said on Wednesday.
“France needs labor market reforms, it is the country among euro zone countries that works the least each year, so how do you expect any results from that? Things won’t work unless more efforts are made.”
France and Germany have been at the core of efforts to stop the euro zone crisis spreading from the periphery to the larger economies.
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