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September 27th, 2019

EMU reform preferences: Is there a consensus between French and German MPs?


Estimated reading time: 5 minutes

Blog Team

September 27th, 2019

EMU reform preferences: Is there a consensus between French and German MPs?


Estimated reading time: 5 minutes

Agreement between France and Germany is seen as a prerequisite for any substantial reform of Europe’s Economic and Monetary Union, but how feasible is it to find consensus positions between members of the French and German parliaments? Drawing on a new study, Sebastian Blesse, Pierre C. Boyer, Friedrich Heinemann, Eckhard Janeba and Anasuya Raj demonstrate that when it comes to the future of the EU and the Eurozone, ideological differences matter more than national differences between French and German representatives. However, for EMU-related policies and reform options, there is a strong and robust difference between parliamentarians of both countries even if they belong to the same party family.

The dramatic years of the euro area debt crisis have yielded substantial learning effects. The verdict that the European Monetary Union (EMU) in its initial set-up resembles a “half-built house” has become a far-reaching consensus. After substantial reforms of fiscal rules, the set-up of the European Banking Union and the establishment of the permanent European Stability Mechanism, the political and academic reform debate remains intense and the future of the Eurozone unclear.

When it comes to the political feasibility of EMU reforms, the existence of a French-German consensus is usually seen as one of the necessary (albeit not sufficient) conditions. Using an original survey of French and German members of national parliaments (henceforth abbreviated MPs) we provide novel insights on the extent to which this consensus exists.

We consider three potential drivers of preferences: (a) nationality, (b) ideology, and (c) personal characteristics. We focus in particular on the need to disentangle the influences from nationality (i.e., the “cultural” Rhine divide) and ideology/party membership. The former would constitute a long-run obstacle to a German-French consensus, while the latter can change with elections.

For policies like Eurobonds, the Fiscal Compact and the European Central Bank asset purchase programme we find a robust difference between MPs of both countries even if they belong to the same party family and controlling for individual characteristics. Based on our estimates, however, we predict agreement between German left-wingers and French conservatives even for ideological differences that are smaller than the current difference between the left and the right European party families. Our findings suggest that deeply-rooted national differences between countries do not impose a prohibitive obstacle to a German-French parliamentary consensus on European Monetary Union policies.

National parliaments and survey description

Our study is unique insofar as it is based on the first comparative survey of euro reform preferences in national parliaments in the euro area: France (covering both chambers, the Assemblée Nationale and the Sénat) and Germany (Deutscher Bundestag).

German MPs in our survey were elected in late 2013 for four years in office. The Assemblée Nationale and the Sénat are the lower and the upper house of the legislative branch in France, respectively. While MPs in the Assemblée Nationale are elected by majority decisions in up to two rounds for five years (starting in our sample in 2012 for the legislative term ending in 2017), members of the Sénat are indirectly elected by elected officials of various tiers of government. Half of the senators are elected every three years for a six-year term, the last election preceding our survey being September 2014.

We received 232 completed questionnaires from 1,552 national MPs in Germany and France in total (a response rate of 14.95 per cent). In what follows, we use the respective fraction membership in the European Parliament (EP) as the measure of the left-right position. Our baseline estimates consider MPs from the fractions of both Socialists and Democrats (S&D), Greens (Greens/EFA) as well as European United Left–Nordic Green Left (GUE/NGL) as left-leaning MPs, which we compare to the conservatives of the European People’s Party group (EPP), the Europe of Nations and Freedom (ENF) and the Liberals (ALDE).

Survey Findings

We look at the relative importance of ideology and nationality for EMU policy preferences. Figure 1 provides a scatter plot of the estimated marginal effects for both the national dummy (France) and the ideological dummy (left) together with the 45° lines where the absolute size of marginal effects of ideology and nationality is identical. Our regression results suggest that ideology matters more than nationality: positions within the shaded area indicate that the impact of ideology exceeds that of the national dummy for all included national and EMU-related reform issues.

Since, for EMU issues, the sign of the estimated France dummy always corresponds to that of the left party family, EMU preferences tend to be most polarised between a German conservative and a French MP from the left. Conversely, a French conservative is more aligned to a German policy maker from the left, since the nationality and ideology effects counteract each other in this comparison.

The descriptive evidence provides some support for the “Rhine divide” hypothesis. Significant differences between German and French politicians are found in key areas concerning the future of the Eurozone: the desirability of a strong ECB role, mutual guarantees through Eurobonds and fiscal constraints like those of the Fiscal Compact. Compared to their French colleagues, German members of the Bundestag are also more sceptical when it comes to a new stabilisation instrument like the European Unemployment Insurance (EUI), or common tax policy, although country polarisation is less pronounced for these two policies.

However, no strong national cleavage can be detected for an important supply side issue like more labour market flexibility, for which only the partisan cleavage appears to be very strong. Distinct national differences – beyond those explained by ideological differences – are much less pronounced when it comes to national growth increasing policies. When in the same political camp, Germans and French MPs do not hold very different views in this regard.

Figure 1: Marginal effects of ideology and nationality

Note: This figure plots the magnitude of estimated coefficients of party ideology and nationality on all survey questions taken. The marginal effects for the France and the Left dummy are marked on the x- and the y-axis, respectively. The plot does not take statistical significance into account. The shaded area identifies the range where the marginal effect of ideology exceeds that of nationality. For more information, see the authors’ accompanying paper at European Union Politics.

Discussion and outlook

Our results indicate that ideological differences concerning the future of Europe and the Eurozone are quantitatively more important and more robust than national differences between the French and the Germans. However, for EMU-related policies and reform options we find a strong and robust difference between parliamentarians of both countries even if they belong to the same party family. Individual characteristics of members of parliament play only a minor role.

Our results suggest that institutional reforms relating to economic policies in the Euro area may be backed by national parliaments when in both France and Germany the majorities in parliament share the same ideological position. However, even accounting for ideological differences, a “Rhine-divide” prevails in fiscal and monetary issues of the EMU.

For more information, see the authors’ accompanying paper at European Union Politics

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Note: This article gives the views of the authors, not the position of EUROPP – European Politics and Policy or the London School of Economics. Featured image credit: La Moncloa – Gobierno de España (CC BY-NC-ND 2.0)


About the authors

Sebastian Blesse – ZEW / University of Frankfurt
Sebastian Blesse joined ZEW’s Research Department “Corporate Taxation and Public Finance” as a researcher in June 2015. He is PhD candidate in Economics at the University of Frankfurt and a member of the SFB 884 “Political Economy of Reforms” in Mannheim. His research interests include fiscal federalism (e.g. administrative border reforms), empirical taxation, attitudes towards public policy and political economy as well as applied econometrics.

Pierre C. BoyerÉcole Polytechnique
Pierre C. Boyer is Professor at École polytechnique (Center for Research in Economics and Statistics). He is the Programme Director of the research group “Democracy and Institutions” at the Institut des Politiques Publiques (IPP) in Paris. He is Research Fellow at the CEPR (London) and the CESifo (Munich). His research interests include public economics, political economy, European integration, and banking regulation.

Friedrich Heinemann – ZEW / University of Heidelberg
Friedrich Heinemann is Head of the Department “Corporate Taxation and Public Finance” at the Leibniz Centre for European Economic Research (ZEW) in Mannheim as well as Professor of Economics at the University of Heidelberg. His research focuses on empirical public finance and political economy in the context of European integration. He has extensively contributed to the European Union reform debate with proposals on the future of the European budget and the institutional set-up of the euro area.

Eckhard Janeba – University of Mannheim
Eckhard Janeba is a Professor of Economics at the University of Mannheim (Germany) since 2004. He is a member of the Board of Academic Advisors to the Federal Ministry for Economic Affairs and Energy, and from 2013 to 2018 he was the Chairman of the Independent Advisory Board to the German Stability Council. Eckhard Janeba’s research interests are in public economics and international trade.

Anasuya Raj – École Polytechnique
Anasuya Raj is PhD candidate at École Polytechnique (Center for Research in Economics and Statistics) and an affiliated PhD student at the Institut des Politiques Publiques (IPP) in Paris. Her work is mainly in public finance, with a focus on income taxation and political economy, and on European integration.

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Posted In: Anasuya Raj | Eckhard Janeba | EUP series | featured | Friedrich Heinemann | Pierre C. Boyer | Politics | Sebastian Blesse

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