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FILE PHOTO - French President Emmanuel Macron delivers a speech after signing documents in front of the media to promulgate a new labour bill in his office at the Elysee Palace in Paris, France, September 22, 2017. REUTERS/Philippe Wojazer(reuters_tickers)
By Jean-Baptiste Vey
PARIS (Reuters) - French President Emmanuel Macron will set out plans for reforming the European Union on Tuesday, including proposals for a separate eurozone budget, despite a German election result that is likely to complicate his far-reaching ambitions.
German Chancellor Angela Merkel's conservatives saw their support slide in Sunday's election, though they remain the biggest parliamentary bloc. She is expected to seek a coalition with the liberal Free Democrats (FDP) - who have criticised Macron's ideas for Europe - and the Greens.
Elysee officials said Macron, who has promised sweeping reforms to Europe's monetary union in coordination with Merkel, hoped the issues to be raised in his speech would be taken into account in Germany's coalition negotiations.
One Elysee official said a eurozone budget, one of Macron's most contentious ideas, would be "necessary in due course" and that the president would therefore raise the issue in his speech, to be delivered at the Sorbonne University in Paris.
Since his election in May, Macron has made the overhaul of the EU and its institutions one of his major themes. As well as his eurozone budget idea, he wants to see the appointment of a eurozone finance minister and the creation of a rescue fund that would preemptively help countries facing economic trouble.
Ahead of Sunday's election, Merkel had indicated her willingness to work with Macron on a reform agenda, even if her own ideas may not reach as far as his. But the election results have left Merkel facing a difficult coalition-building task which is in turn likely to limit her flexibility on Europe.
A coalition of Merkel's CDU/CSU bloc, the FDP and the Greens is unprecedented at the national level - and any attempt by the chancellor and Macron to press for greater EU integration will face opposition from the new German lower house Bundestag.
The FDP has called for a phasing out of Europe's ESM bailout fund and changes to EU treaties that would allow countries to leave the euro zone. And the far-right, eurosceptic Alternative for Germany is now the third biggest party in the Bundestag, further curbing Merkel's room for manoeuvre.
But Elysee officials noted that the FDP had reaffirmed its attachment to the EU and to strong Franco-German relations, a point Macron was likely to emphasise in his speech while at the same time not seeking to impose anything on his partners.
Macron, the sources said, would propose that the whole EU move forward together, and that those who did not want to should not stand in the way of those that did.
Coming just two days after the German election, Macron's speech is likely to be interpreted in Germany as an attempt to shape the debate before the coalition talks begin in earnest.
German coalition agreements are strict, with the contours set out in them limiting the government's room for manoeuvre. In that respect, Merkel's ability to work with Macron on EU reform will be pre-determined by whatever coalition deal is struck.
FDP leader Christian Lindner said on Monday he would not agree to any coalition that did not promise a change in the German government's direction.
While that appeared to set the stage for tough talks, he also offered hope for Macron, saying when asked about the French president's eurozone budget ideas that the FDP had a "strong interest" in the strength of France.
(Reporting by Jean-Baptiste Vey and Marine Pennetier; Writing by Luke Baker; Editing by Gareth Jones)