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By Bloomberg

Lawmakers from Chancellor Angela Merkel's coalition rejected raising state spending in a snub to French cabinet ministers who are having talks with their German counterparts in Berlin on how to boost growth.

French Economy Minister Emmanuel Macron, accompanied today by Finance Minister Michel Sapin, said he hoped for a "deal" with Germany to boost growth-enhancing public spending as the euro area's outlook frustrates France's bid to cut its budget deficit. They may be disappointed as German lawmakers vowed to stick with plans to balance the country's budget next year.

"We're not in recession even if the growth outlook's dipped somewhat -- I'm not sure how we can help the French," Ingrid Arndt-Brauer, chairman of the all-party finance committee in parliament, said in a Oct. 18 phone interview. "We'll stick with the budget goal" and "there's hardly any wiggle room to raise spending."

Macron and Sapin said they want Germany to invest an extra 50 billion euros ($64 billion) over three years to match 50 billion euros in French spending cuts, the Frankfurter Allgemeine Zeitung newspaper said today, citing an interview with both ministers. "Europe is confronting a demand problem," Macron told FAZ. The newspaper quoted him as warning against an "exaggerated savings policy."

"We will talk about the economic situation, there will be a joint assessment, we will especially talk about how we can foster investments," Finance Ministry spokesman Martin Jaeger told reporters at a regular government press conference in Berlin today when asked about the FAZ report. The meeting will send "a signal of unity and partnership."

Zero Borrowing

Merkel and Finance Minister Wolfgang Schaeuble -- both Christian Democrats -- are united with Social Democratic Economy Minister Sigmar Gabriel on a budget plan that would push net borrowing to zero for the first time since 1969. Differences have emerged on the scope of infrastructure spending next year, not on budget goals.

Germany's parliament is struggling with the implications of weaker economic growth on the budget, said Arndt-Brauer, who said any additional plans to boost spending on infrastructure "must run parallel" to next year's budget planning -- "not within it." Arndt-Brauer is a member of Gabriel's Social Democrats.

Growth Forecast

Gabriel on Oct.

14 cut the economic growth forecast for Europe's biggest economy next year to 1.2 percent from 1.8 percent, signaling the need to shift spending targets to achieve the budget goal. In a week in which market indexes sagged across Europe, Merkel told parliament on Oct. 16 that Germany was staying the course.

"We in Germany are showing that growth and investment can be strengthened without leaving the path of consolidation," Merkel said. "The crisis isn't overcome in a lasting way."

"There's no scope in the foreseeable future" to boost spending on infrastructure, Norbert Barthle, Merkel's CDU budget spokesman, said in an Oct. 17 reply to e-mailed questions.

German lawmakers are assessing new tax revenue estimates before finalizing the 2015 budget by Nov. 13, before it goes to a vote in parliament, Barthle said.

Gabriel has asked academics from Berlin's Hertie School of Governance to come up with proposals, including infrastructure spending, to help both the French and German economies.