France calls for more German ambition on the euro zone

By Noah Barkin

BERLIN (Reuters) - France called on Friday for more ambition from Germany in reforming the euro zone, saying Europe faced a "now or never" moment with rising external threats from the United States and China.

French Finance Minister Bruno Le Maire, speaking in German to a business conference in Berlin, offered the first official response from Paris to European reform proposals sketched out by Chancellor Angela Merkel in a weekend newspaper interview.

He welcomed her support for the idea of a euro zone investment budget, one of French President Emmanuel Macron's key demands, but said France and Germany had "a way to go" to reach a common position that was truly ambitious.

"Our European future is at stake. We must act, it is now or never," Le Maire added. He received warm applause from the crowd of executives after declaring: "France is back".

Alongside his domestic reform push, Macron has sketched out a far-reaching vision for Europe in a series of speeches over the past year. But until Sunday, Merkel had not offered a detailed response.

She has now backed Macron's idea for a euro zone budget, but made clear that it should be limited in size to the "low double-digit billions of euros", far smaller than what Macron has been seeking.

Merkel has also voiced support for a strengthening of the euro zone's ESM bailout mechanism, but her suggestions that it could assume economic surveillance responsibilities from the European Commission and oversee debt restructurings are unlikely to be welcomed in Paris.

"STEP BY STEP"

French officials have told Reuters in recent days that while the size of the euro zone budget is important, their main goal is to agree a framework with Germany. Le Maire explained that a budget should have two main aims: to foster economic convergence and to help states hit by economic shocks.

"This budget must have its own resources. Its size can be increased step by step," Le Maire said.

France and Germany have promised to present a joint reform proposal at a European Union summit on June 27-28. Le Maire will meet with his German counterpart Olaf Scholz in Paris on Saturday in an attempt to narrow the differences.

In his speech, Le Maire touched on the external challenges facing Europe, singling out China for buying up European technology and U.S. President Donald Trump for threatening Europe with trade tariffs.

"We can't allow China and the United States to determine the fate of the world," he said.

(Reporting by Noah Barkin; Editing by Michelle Martin and Gareth Jones)