January 10, 2017 / 8:08 PM / 7 months ago

Euro may not exist in 10 years, France's Macron says

Wads of euro banknotes are stacked in a pile at the Money Service Austria company's headquarters in Vienna, Austria, March 3, 2016.Leonhard Foeger

BERLIN (Reuters) - The euro may not exist in 10 years' time if Paris and Berlin fail to bolster the single currency union, French presidential candidate Emmanuel Macron said on Tuesday, adding the current system benefited Germany at the expense of weaker member states.

Macron was economy minister under Socialist President Francois Hollande until he resigned last year to create his own political movement and stand as an independent candidate in this year's presidential election.

"The truth is that we must collectively recognise that the euro is incomplete and cannot last without major reforms," Macron said in a speech at the Humboldt University in Berlin.

Speaking in English, he added: "It has not provided Europe with full international sovereignty against the dollar on its rules. It has not provided Europe with a natural convergence between the different member states."

France must implement labour market reforms and revamp its education system to revive growth, while Germany must accept that more investment instead of austerity can boost growth across the euro zone area, the centrist politician said.

"The dysfunctioning of the euro is of good use to Germany, I have to say," said Macron, adding that a lack of trust between France and Germany was blocking major reforms that would increase solidarity among the 19 members of the euro zone.

"The euro is a weak Deutsche Mark," said Macron. "The status quo is synonymous, in 10 years' time, with the dismantling of the euro."

Emmanuel Macron (C), head of the political movement En Marche !, or Forward !, and candidate for the 2017 French presidential election visits a qualification class for refugees of German railway operator Deutsche Bahn in Berlin January 10, 2017.Fabrizio Bensch

He proposed the creation of a euro zone budget to finance growth-oriented investments and to extend financial assistance to struggling member states.

GERMAN RESISTANCE

However, this would be anathema to German Chancellor Angela Merkel and Finance Minister Wolfgang Schaeuble, whose conservatives face an election this year and have faced domestic resistance to bailouts for Greece by hawks who say such payments turn the euro zone into a "transfer union".

Macron spoke after the co-leader of Germany's far-right Alternative for Germany (AfD) party earlier told Reuters the euro zone should be split into two with a strong cluster around Germany and a weak cluster including France.

Macron, a rare advocate in France of deeper European integration, has taken the unusual step of encouraging supporters to cheer the European Union at political rallies in contrast with other politicians who often rail against "Brussels".

Macron, 39, has enjoyed a boost in recent polls, which show him cementing his position as the presidential election’s "third man" and within a whisker of reaching the crucial second round runoff to be held in May.

An opinion poll last week showed conservative candidate Francois Fillon's lead in France's presidential election race had narrowed, with both Macron and far-right leader Marine Le Pen gaining on the former prime minister.

(Corrects to say Macron resigned last year, not this.)

Reporting by Joseph Nasr; Editing by Gareth Jones

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