The backlash against Merkel bashing by the French Socialists

The fallout from the French Socialists' Merkel-bashing is all over in the press this morning though Hollande's new enterprise friendly growth proposal got some coverage as well. Calling Angela Merkel "austerity chancellor" and of "selfish intransigence" provoked strong protests from the conservative parties on both sides of the Rhine.

Franco-German quarrels are not new, but it is bad timing. Until the German elections in September this year both countries have to work together on several controversial issues: A new perspective for fiscal consolidation and growth, the banking union and a free-trade agreement with the USA. EU diplomats worry about a rude tone and a breakdown in dialogue and the lack common initiatives between the two countries in a time when there is a need more than ever for both countries to work together constructively, according to Les Echos. The rules for bank recapitalisation through the ESM are to be agreed upon as well as the rhythm of fiscal adjustment over the medium term.

The Franco-German éclat over the last days had one good effect though, according to Cecile Cornudet in Les Echos. Germany mobilised the opposition and reunited the UMP party to an extend none of the other themes managed to. All are blaming Francois Hollande personally for the rise of germanophobia in the Socialist party. Francois Fillon and Jean-Francois Cope issued their first common statement since the battle over the party presidency last autumn to accuse Hollande using Angela Merkel as a scapegoat for his own failed economic policy. Alain Juppe, Bruno Le Maire and Bernard Accoyer all raised their voices leaving this time no space for Nicolas Sarkozy to issue his statement.

Le Monde says playing with Germanophobia is an old game between the French left and right, citing some examples over the last 12 years. Then the roles were inverse, with the left reacting to the UMP accusing them of unbearable German-bashing.

Francois Hollande, meanwhile, wants to turn a page with his business friendly proposals, which nearly got side-tracked in the news. The proposals including breaks on capital-gains taxes as well as visas for foreign entrepreneurs. Hollande plans to introduce a tax exemption of up to 85% of capital gains for investors in startups, and other mechanisms aimed at encouraging investors to put their money into small businesses, writes Wall Street Journal. The new tax exemptions replace a complex web of around 40 existing rebates. It will add rebates for investors who keep their capital in a company: A rebate on capital-gains taxes will reach 65% for investors who hold their stake for eight years, instead of 40% at present. The total rebate could be as high as 85% for investors who bought shares when a company was less than 10 years old. As part of the new image changing initiative, Hollande also announced an educational programme in entrepreneurship to be introduced in schools for children from age 11 upward, involving business leaders and internships for youths.