TRADE SURPLUS Brussels Scolds Germany

The European Commission has criticized Germany for contributing to economic imbalances in the euro zone. The E.U. executive body joins a long list of countries prodding Germany to cut its trade surplus.
Quelle: dpa
Wolfgang Schäuble may not like the advice he's getting from Mr. Moscovici.
(Source: dpa)

Germans may be proud of their record trade surplus, but the European Commission views the German economic model as a growing problem for the entire euro zone.

Pierre Moscovici, the E.U. commissioner for economic and financial affairs, scolded Germany on Wednesday for being too dependent on exports and having a surplus of domestic savings.

With that, Mr. Moscovici was joining a long list of political officials who have piled on Germany's excessive trade surplus of late, most notably from the incoming Trump administration that has threatened to impose import tariffs on exporters like carmakers in response.

Germany’s trade surplus surged to a record 8.6 percent of its economic output in 2016, surpassing even China and far exceeding the European Union’s upper limit of 6 percent.

While economists here say the country could take some steps to boost spending, most argue there's little the government can do to address the imbalance.

Mr. Moscovici’s criticism came on the heels of a European Commission report, published Wednesday, that took Germany and other countries to task for creating imbalances within the euro zone.

In the report, the commission said it expects Germany’s trade surplus to remain high going forward, which could create problems for highly-indebted member states in southern Europe.

"Addressing the surplus has implications on the re-balancing prospects of the rest of the euro area because more dynamic domestic demand in Germany helps overcoming low inflation and eases deleveraging needs in highly-indebted member states," the commission said in the report.

It's not the first time the E.U. executive has taken aim at Germany in its annual report on imbalances. The commission first singled out Europe's largest economy for violating its rules in 2014.

So far, officials in Berlin have shrugged off the complaints coming from both sides of the Atlantic. And while economists here say the country could take some steps to boost spending, most argue there's little the government can do to address the imbalance.

While Germany was criticized for its trade surplus, the commission took Italy to task over its budget deficit. Brussels warned Rome that it needs to cut its structural deficit to 0.2 percent of economic output by April.

Italy’s state debt is projected to increase to 133.3 percent of its economic output this year, up from 132.8 percent last year. Under E.U. rules, Italy needs to reduce its debt by more than 3 percent.

France, by contrast, was praised for making some improvements, though the commission warned that the euro zone’s second-largest economy still faced “excessive imbalances.”

The commission called on Paris to streamline public spending and taxation; reform the minimum wage and unemployment benefits; and improve education and its business environment.

France’s debt is projected to rise to 97 percent of economic output next year over the 96.7 percent projected for this year, according to the commission.