Merkel, Hollande pledge to work together to boost growth

Reuters News
Posted: May 15, 2012 5:05 PM
Merkel, Hollande pledge to work together to boost growth

By Stephen Brown and Andreas Rinke

BERLIN (Reuters) - New French President Francois Hollande and German Chancellor Angela Merkel acknowledged differences on Tuesday over how to boost growth in recession-plagued Europe, but pledged to work together on a joint approach in time for a summit next month.

Hollande jetted to Berlin hours after his inauguration to meet Merkel for the first time, but arrived over an hour late after his plane was hit by lightning and he was forced to return briefly to Paris.

The meeting between the leaders of Europe's biggest economies was being closely watched after Hollande sharply criticized Merkel during his campaign for insisting on tough austerity in highly indebted euro countries.

He has vowed to shift Europe's focus back to growth and reopen a tough new set of budget rules that Merkel and other EU leaders agreed to adopt earlier this year, a step considered taboo in Berlin.

"I said it during my election campaign and I say it again now as president that I want to renegotiate what has been agreed to include a growth dimension," Hollande told a joint news conference with Merkel at her Chancellery in the German capital.

Merkel shunned Hollande, a Socialist, during the French election campaign, instead supporting conservative incumbent Nicolas Sarkozy, with whom she has worked closely for the past five years. The duo earned the moniker "Merkozy" for their cooperation during the euro zone debt crisis.

The new Franco-German couple - referred to by some as "Merkollande" - took care to play down their differences on Tuesday, hoping to send a signal of unity at a time when speculation is growing that Greece may have to exit the euro zone and return to the drachma.

"Growth has to feed through to the people. And that's why I'm happy that we'll discuss different ideas on how to achieve growth," Merkel said.

They said the goal was to present joint proposals at a European Union summit in late June.

After the news conference, they dined in the Chancellery on lamb schnitzel and asparagus, before Hollande's late-night return to Paris. He is due to fly to Washington later in the week to meet U.S. President Barack Obama.

Hollande finds himself in the hot seat from day one. Earlier on Tuesday Greece abandoned a nine-day hunt for a new government and called a new election that could hand victory to leftists opposed to the terms of the country's EU/IMF bailout.

A growing number of policymakers in Europe have warned over the past week that if Greece does not stick to the budget cuts and structural reforms agreed with its international lenders, it may have no future in the currency bloc.

"Like Mrs. Merkel, I want Greece to remain in the euro zone," Hollande said.

"I hope that we can say to the Greeks that Europe is ready to add measures to help growth and support economic activity so that there is a return to growth in Greece at a time when it is in recession," he added.

(Reporting by Stephen Brown, Andreas Rinke, Gareth Jones and Annika Breidthardt, writing by Noah Barkin, editing by Gareth Jones)