Le timebomb ticking more loudly

The timing could hardly be worse. As French Prime Minister Jean-Marc Ayrault prepared to make his first visit to Germany in an effort to convince Berlin of the French economys resilience, the influential Economist magazine ran a cover story declaring that France was now the "timebomb at the heart of Europe".

Still, if Ayrault was silently cursing the editor of the Economist, there was at least some good news. His visit to Berlin coincided with the release of new figures that the French economy expanded by 0.2 per cent in the third quarter - exactly the same rate as Germany. In contrast, the overall euro zone economy plunged back into recession for the first time in three years, as countries such as Greece, Italy, Spain, Portugal, Austria and the Netherlands recorded sharp falls in growth.

The Ayrault visit came at a time when Berlin is deeply worried that the French economy is vulnerable to a deep recession, which would damage the entire euro zone, including Germany. Berlin also knows that broad-ranging reforms throughout the euro zone are impossible unless they are driven by a strong Franco-German partnership. The point was emphasised by German Chancellor, Angela Merkel. Berlin, she said at a press conference overnight, wants "a strong France, just as France wants a strong Germany, in order to create a strong Europe." She also wished the Socialist government of French President Franois Hollande "great success" with its recent efforts to boost the country's competitiveness.

Released by the Australian Financial Review - 16 November 2012