By William Horobin in Paris and Marcus Walker in Berlin 

French President Emmanuel Macron wants his voice heard as Germany forms a new government.

Mr. Macron is due to flesh out his proposals for deeper integration of the European Union and its common currency, the euro, in a speech at the Sorbonne university in Paris on Tuesday. The timing of the speech, two days after Germany's elections, is aimed at influencing German Chancellor Angela Merkel's talks with potential coalition partners, French officials say.

The young French leader knows his ambitious calls for a deeper union between the euro's 19 members are controversial in Germany, and wants to set out France's position before politicians in Berlin start to discuss their future policy on Europe, they say.

The outcome of the tussle between the EU's two dominant nations will be central to the eurozone's future. Although the bloc's economy is finally enjoying solid economic growth after years of slow recovery, officials in Paris and Berlin say the euro's members' economies continue to diverge, leaving the region vulnerable to future turbulence such as the debt crisis that pushed the bloc to the brink of collapse in 2010-12.

Ms. Merkel's conservative Christian Democrats came first in Sunday's German elections but with a shrunken share of the vote. She is now exploring the scope for a governing coalition with the left-leaning Greens and the pro-business Free Democrats. Such an alliance would have to reconcile major ideological differences on Europe, as on many other issues.

The Free Democrats, known as the FDP, are particularly skeptical about France's push to create a shared eurozone budget to boost investment and fight against economic shocks.

Ms. Merkel also has strong reservations about Mr. Macron's ideas, but she has expressed her willingness to talk about them.

Berlin officials say the chancellor doesn't want to embarrass Mr. Macron by flatly rebuffing him, because Germany is keen for him to succeed in his simultaneous efforts to overhaul France's economy.

"I'm not going to be ruling everything out in advance. We can have more Europe, but it has to lead to more competitiveness, more jobs, and more effectiveness of the European Union," she told a news conference on Monday. "Besides, we have to talk with the FDP about it first anyway."

Mr. Macron has previously said a budget for the eurozone should be worth several percentage points of the bloc's gross domestic product, and be funded by common borrowing as well as a portion of taxes that are currently national. He has argued that the eurozone's current design isn't stable enough to survive in the long term, and that it needs a fiscal union to absorb economic shocks, as well as a common finance minister to manage the central budget.

Such ideas have long been anathema to German center-right politicians in both Ms. Merkel's party and the FDP. The dominant view in Berlin is that the eurozone's future stability relies on its member countries reforming their national economies to make them leaner and more competitive, rather than on large public-spending plans at the European level.

The FDP was dismissive of Mr. Macron's proposals during the election campaign and is seen in Paris as the biggest foe of the changes Mr. Macron wants. On Monday, FDP leader Christian Lindner moderated the party's tone, saying he opposes lasting fiscal transfers between euro members, but that he is willing to talk about measures to boost investment in the eurozone, including within the existing EU budget.

France and others in Europe are watching closely to see who will control the German finance ministry in Ms. Merkel's next government. The FDP said before the elections that it would lay claim to the ministry, a major power center in setting the eurozone's finance policies. On Monday, FDP leaders said publicly that policies, not ministries, were their priority. Behind the scenes, the party is expected to push for the finance post, however.

Germany's current finance minister Wolfgang Schäuble, one of the EU's most influential figures in the past eight years, is known to want to continue in his job, and has the backing of his Christian Democrats. Mr. Schäuble is an advocate of stricter fiscal discipline in the eurozone but is seen as slightly more open than Ms. Merkel, or the FDP, to some of France's federalist ideas.

Mr. Macron has a lot riding on whether he can bend Berlin toward his federal European vision. The 39-year-old won France's presidential election promising skeptical French voters he could improve their lot in Europe through changes to the EU, rather than taking the bloc apart, as his main rival National Front leader Marine Le Pen had promised.

In his first four months in power, Mr. Macron has quickly pushed through unpopular measures at home that Paris hopes will boost France's economic performance and its political clout in Europe. Overhauls include spending cuts to bring France's deficit within EU rules, and changes to labor laws to make the country's job market more flexible.

The young leader's approval ratings have sunk swiftly as public support for those policies has proved limited. It isn't clear, however, that Mr. Macron's efforts at home are sufficient to convince Berlin to sign up to his European initiatives.

Write to William Horobin at William.Horobin@wsj.com and Marcus Walker at marcus.walker@wsj.com

 

(END) Dow Jones Newswires

September 26, 2017 08:46 ET (12:46 GMT)

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