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German Rebalancing

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German Rebalancing

Waiting for Godot?

CER,

5 min. de leitura
5 Ideias Fundamentais
Áudio & Texto

Sobre o que é?

Like the title character in Waiting for Godot, Germany’s efforts to rebalance its economy never appear.

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Editorial Rating

8

Qualities

  • Well Structured
  • Overview

Recommendation

Thrift is prudent, but not to excess, says economist Simon Tilford. He takes the German government to task for a robust and enduring current account surplus, arguing that excessive savings are harming growth both at home and in the euro zone. He advises Germany to adopt reforms that can raise living standards and economic productivity. Tilford writes at a level accessible to the lay reader as well as the economist, and his articulate report makes several cogent, relevant observations. getAbstract recommends it to policy makers, investors, executives and euro watchers.

Summary

Entrenched policies are keeping Germany from reducing its massive current account surplus, which not only curbs domestic investment and spending but leaves the euro zone in a moribund state. Its 2014 surplus, a national record of 7.5% of GDP, was the world’s biggest, at more than €200 billion. In fact, Germany now violates EU rules that limit surpluses to no more than 6% of GDP. The current account measures a nation’s income against its expenditures, and a surplus simply indicates an excess of savings over consumption. Germany’s robust exports compensate for weak domestic demand...

About the Author

Simon Tilford is deputy director of the Centre for European Reform.

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