This time, Germany also appears on the list of villains. The European Commission has opened an investigation into Berlin's accounts for violating EU trade rules. Nothing to worry about for German citizens: the numbers of the locomotive of Europe are not negative at all. On the contrary, the problem lies precisely in the excessively positive trend of exports, which can create macroeconomic imbalances in the EU to the detriment of the other member countries.
“We have decided to prepare an in-depth analysis of potential imbalances in 16 countries – said the president of the Commission, José Manuel Barroso -. This also includes Germany, due to a persistently high current account surplus. We need to understand whether this surplus has a negative impact on the functioning of the European economy, even if we are aware that the German surplus concerns Germany's trade relationship with the world, not just with the eurozone”.
According to community agreements, the threshold for the current account surplus (ie the external accounts derived from the ratio between imports and exports) is equal to 6% of GDP on average over the last three years. A limit constantly violated by Germany, which recorded a surplus of 6,24% in 2010 and 6,21% in 2011, reaching even more than 7% last year. The three-year average is 6,5%. In general, the German surplus has exceeded 6% since 2007.
But it's not over. The trade balance isn't the only item Berlin has overshot: there are four in all. The list also includes the real effective exchange rate, the decline in market shares and government debt. "A review will be launched to better evaluate the position with foreign countries and analyze internal developments", reads a note from the Commission, which will conclude the procedure between February and March 2014, possibly indicating the corrections to be made. In the event that Germany ignores Brussels' recommendations, it will be punished with a fine equal to 0,1% of GDP.
The investigation is part of a high-tension political context. For some time, various countries have accused Berlin of hindering the recovery of Europe (especially in the south) by focusing too much on exports and too little on the revival of domestic demand. The most violent criticism came two weeks ago from the USA.
In its latest report on the currencies and economic policies of competing countries, the US Treasury blamed Germany for "the anemic pace of domestic demand growth and dependence on exports": two factors that "prevented a rebalancing at the moment where many other euro area countries are under strong pressure to reduce demand and squeeze imports in order to promote budget adjustments”. All this would have caused “a tendency towards deflation for both the euro area and the world economy”.
Furthermore, according to the German weekly Der Spiegel, even the deputy director of the International Monetary Fund David Lipton - during his last visit to Berlin - would have asked Germany to reduce the trade balance surplus.
The German Finance Ministry had defined the criticisms from the US as "incomprehensible and unacceptable", arguing that the Federal Republic's budget surplus "is not a source of concern for Germany or for the Eurozone or the world economy". as an exclusive merit of the great German competitiveness. It remains to be seen which side Brussels is on.
