Explaining the Divergence in German and French Public Finances

Abstract

In this contribution, I discuss the divergence of German and French public finances over the course of the last two decades. Major gaps in public deficit/debt levels and debt service costs have opened even under the presence of a common fiscal framework at the EU level. To explain these differences, I focus on three elements: the (non-)perception of budgetary and socio-economic crisis, differences in demographic conditions, and contrasting approaches towards the role of rules and expertise in fiscal policymaking. The contribution illustrates these points by providing two concise case studies on key developments in fiscal policymaking and institutions since the 1990s. I conclude with a brief reflection on German and French fiscal policymaking in the years to come.