Fiscal Policy in France and Germany: Insurmountable Differences?
The state of public finances in France and Germany is often compared. Germany is considered a model of rigor, through its ability to contain its deficits and generate surpluses, particularly between 2012 and 2019, thanks to the introduction into its constitution of a debt brake mechanism.
Conversely, France has a bad reputation, with a budget regularly in deficit since 1975. However, it was from the mid-2000s onwards that the budgetary trajectories of the two countries clearly diverged, which can be measured through the budget balance and the level of public debt.
However, in the context of multiple crises that Europe is experiencing since the euro zone crisis in 2010, until the Ukrainian war in 2022, including the Covid-19 pandemic, the consequences of the management of public debt translates differently in each country. The assessment should be more nuanced though with regard to the effects produced by the pursued political decisions:
On the German side, too little public investment is currently weighing on the quality of infrastructure, particularly in energy and transport, but also the operational level of the Bundeswehr. As a result, surpluses have amounted which were based on a growth model, highly exposed to international risks, and a reluctance to strengthen the coordination of economic policy at the European level.
As for France, its budgetary vulnerability has recently particularly accrued, marked by weak growth and a sharp increase in interest rates, after a long period of zero or even negative rates.
While the financing needs are considerable in both countries and in Europe as a whole, to complete the energy transition, relocate certain production and strengthen defense, what budgetary policy measures should Germany and France take? What are the possible points of convergence? Compromises are essential to ensure the reform of the Stability and Growth Pact and, beyond that, to ensure better governance of European economic policy.
- This note was written in partnership with the Jacques Delors Institute, a European think tank.
Dr. Andreas Eisl is a Research Fellow in European Economic Policy at the Jacques Delors Institute and an Associate Researcher at the Paris Institute for Policy Studies (Sciences Po).
This publication is also available in French and German (pdf):
FRENCH: Politique budgétaire en France et en Allemagne : des divergences insurmontables ?
GERMAN: „Unüberwindbare Divergenzen in der Haushaltspolitik Deutschlands und Frankreichs?“
Author(s)
Related centers and programs
Discover our other research centers and programs
The Study Committee on Franco-German Relations (Cerfa)
The Study Committee on Franco-German Relations (Cerfa) was created in 1954 by an inter-governmental agreement between the Federal Republic of Germany and France, in order to raise awareness of Germany in France and analyze Franco-German relations, including in their European and international dimensions. In its conferences and seminars, which bring together experts, political leaders, senior decision-makers and representatives of civil society from both countries, Cerfa develops the Franco-German debate and stimulates political proposals. It regularly publishes studies through two collections: Cerfa notes and studies as well as Franco-German visions.
Cerfa maintains close relations with the network of German foundations and think tanks. In addition to its research and debate activities, Cerfa promotes the emergence of a new Franco-German generation through original cooperation programs. This is how in 2021-2022, Cerfa led a program on multilateralism with the Konrad Adenauer Foundation in Paris. This program is aimed at young professionals from both countries interested in the issues of multilateralism in the context of their activities. It covered a wide range of themes relating to multilateralism, such as international trade, health, human rights and migration, non-proliferation and disarmament. Previously, Cerfa had participated in the Franco-German future dialogue, co-led with the DGAP from 2007 to 2020, and supported by the Robert Bosch Foundation and the Daniel Vernet group (formerly the Franco-German Reflection Group) which was founded in 2014 upon the initiative of the Genshagen Foundation.
Find out more
Discover all our analyses
Friedrich Merz and the Zeitenwende 2.0. A “New Era” for Transatlantic Relations?
On February 23, 2025, almost 60 million voters were called upon to elect a new Bundestag. These elections will also give rise to a new government in Europe's largest economy.
After the Elections: Germany in Search of Shaken Stability?
With a voter turnout of 82.5%, Germany recorded its highest participation since 1987—an increase of 6.1 percentage points compared to 2021. As in the previous election, the high turnout particularly benefited the Alternative for Germany (AfD), which was able to mobilize many former non-voters. Many voters sought to punish the outgoing government with their ballots, as its approval rating had dropped to just 14% before the coalition broke apart in November 2024. Germany is now very likely heading toward a grand coalition between the CDU/CSU and the SPD, with exploratory talks having begun on February 28.
The German Greens as an Alliance Party: The End of an Illusion?
At the Wiesbaden Congress in November 2024, Robert Habeck, currently Minister for the Economy and Climate, was nominated as the Green Party’s candidate for the Chancellorship in the early parliamentary elections on February 23, 2025. The party, founded 45 years ago, is now firmly established in the German political landscape. Wishing to turn the page on an unloved ‘‘traffic light’’ coalition, the party is banking on a personal campaign and an optimistic discourse based on the energy transition and social justice.
The rise of the AfD and the choice of radicalism
Founded in 2013, the Alternative für Deutschland (AfD) has become increasingly radical as crises have unfolded. Since 2015-2016 and the massive influx of immigrants into Germany, it has positioned itself as a virulently anti-migrant party and continues to consolidate its foothold in the German political system, particularly in parliaments. While its roots are very strong in the eastern regions, where its main strongholds are located, it is also attracting more and more voters in the west, against an overall backdrop of normalization of the far right and a national context marked by strong economic and political destabilization.