France biggest problem child of Europe, say Germans

France's President Francois Hollande. Photo / AP

A scathing German assessment of France's economic weakness - titled "Europe's biggest problem child" - has reopened divisions between the continent's major powers.

A leaked internal briefing from Chancellor Angela Merkel's coalition partners, the Free Democrats, refers to President Francois Hollande as "meandering" and draws attention to France's "highly regulated labour market and highly developed social security system".

Details of the briefing note were published alongside an internal assessment by Germany's Economics Ministry, which listed the French economy's failings. The ministry's paper said: "French industry is increasingly losing its competitiveness. The relocation of companies abroad continues. Profitability is meagre."

Relations between France and Germany are chilly after Hollande's Socialist Party accused Merkel of "egotistical intransigence" and called for "democratic confrontation" with Berlin.

The socialists' attack on the German Chancellor, which was toned down after a draft was leaked to the press, brought accusations from the French centre-right that Hollande's party had been gripped by Germanophobia.

The public response from the German Government was muted, with Merkel's spokesman describing the French denigration as "background music".

However, the memos - which were leaked to the financial newspaper Handelsblatt - reveal Berlin's harshly critical private view of France's economic woes.

The German Economics Ministry's briefing points out that France has the "second lowest annual working time" in the European Union, while its "tax and social security burden" is the highest in the eurozone. It also warns that France has made too little investment in research and development.

The briefing by the Free Democrats is likely to cause fresh tension between the European partners by describing Hollande's reform programme as "meandering".

The divide between the two nations traditionally regarded as the driving force behind European integration was underlined with new figures showing French unemployment, at 11 per cent, was double that in Germany. The German jobless rate of 5.4 per cent is the second lowest in Europe.

While France clings to its 35-hour working week, workers in Germany have endured years of low pay rises.

The Organisation for Economic Cooperation and Development has said it expects the French economy to grow by 0.1 per cent this year, and has criticised "excessive regulation and high levels of taxation". The German economy is forecast to grow by 0.5 per cent.

The French criticisms of Merkel were made in a working paper prepared before the Socialist Party's convention on Europe in June, which was leaked in the French press last week. The paper's authors claimed that the Chancellor "thinks about nothing except the savings of account holders on the other side of the Rhine, Berlin's trade balance and her electoral future".

German politicians have defended Merkel. Andreas Schockenhoff, foreign affairs spokesman for the Christian Democrat party, said: "The attacks by senior French socialists on the Chancellor are unusual for the German-French relationship, and they are inappropriate. The left-wing Government cannot divert attention from the fact that France requires deep structural reforms."