France, Germany seek to finesse growth vs rigor divide

STRASBOURG, France Thu Apr 4, 2013 7:35am EDT

French Finance Minister Pierre Moscovici attends a news conference to unveil the new income tax form for 2013 at the Finance Ministry in Paris March 27, 2013. REUTERS/Charles Platiau

French Finance Minister Pierre Moscovici attends a news conference to unveil the new income tax form for 2013 at the Finance Ministry in Paris March 27, 2013.

Credit: Reuters/Charles Platiau

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STRASBOURG, France (Reuters) - The finance ministers of France and Germany sought on Thursday to play down differences over the euro zone's economic policy mix, saying budgetary rigor and growth were not incompatible.

But French Finance Minister Pierre Moscovici still pushed longstanding calls for Germany - which has put the emphasis on the need for austerity to rein in public finances - to do more to support growth in the recession-hit euro zone.

"We need to stop this debate which says you have to choose between austerity and growth," Schaeuble said in a speech at an event to mark the Franco-German partnership in the border city of Strasbourg.

"Growth is indispensable," he added.

Despite regular attempts to show a united front, France and Germany have long differed on what dose of fiscal discipline is needed in a zone struggling to return to solid growth after a 2008/2009 downturn was compounded by a sovereign debt crisis.

Berlin, anxious to see southern Europe get its finances in order, fears that euro zone countries will start easing belt-tightening efforts. Paris on the other hand frets about the impact of budget cuts on weak economies such as its own.

Striking a similar vein to Schaeuble, however, Moscovici acknowledged that lasting growth would not return to Europe until countries sorted out their public finances.

But he also said that Europe should rebalance its economic policies more towards boosting growth and added that countries with healthy fiscal and external balances - such as Germany - could play a bigger role.

"Those countries with surpluses can act in a more cooperative way. That requires more coordination," Moscovici said. He did not elaborate but some economists have suggested Germany could stimulate the European economy by allowing higher wage demands in its industry.

(Reporting by Ingrid Melander; writing by Leigh Thomas and editing by Mark John)

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