Monday November 24, 2014 Search
Weather | Athens
14o C
10o C
News
Business
Comment
Life
Sports
Community
Survival Guide
Greek Edition
Germany faces more EU calls to boost demand after surplus probe

Germany faces stepped-up European Union calls to boost investment and demand after EU regulators said the country’s trade surplus poses a threat to the euro-area economy.

The European Commission said a four-month probe of Germany’s current-account surplus revealed a macroeconomic imbalance that may undermine the 18-nation euro. Separate inquiries confirmed various imbalances in 13 other EU countries including France, Italy and Spain, with Italian public debt deemed “excessive.”

The German surplus, which has been at or exceeded the EU’s 6 percent threshold every year since 2006, could cause the euro to appreciate on foreign-exchange markets and thereby hinder peripheral European countries’ efforts to regain competitiveness through internal devaluation, the commission said when it opened its inquiry in November.

“Germany is experiencing macroeconomic imbalances, which require monitoring and policy action,” the commission, the 28- nation EU’s regulatory arm, said in a summary of the investigation released on Wednesday in Brussels. “The policy priorities should be on strengthening domestic demand and medium-term growth.”

The warning to Europe’s largest economy follows four years of European debt-crisis management shaped by German insistence on budget austerity, which deepened recessions in some euro-area nations. The austerity drive has been reinforced in a new, German-championed package of EU laws making sanctions more automatic against spendthrift governments.

The package now threatens to sting German policy makers because, in addition to the measures to control deficits and debt, it has lesser-known provisions on macroeconomic imbalances including trade surpluses. After recommendations tied to enhanced European economic-policy coordination, the beefed-up rules allow for sanctions against euro-area countries that repeatedly fail to tackle a severe imbalance.

As the euro area seeks to bolster the economy after emerging last year from its longest recession, the spotlight is shifting to growth-boosting policies. The U.S. Treasury in October blamed German surpluses for weakening European and global growth, calling Germany’s domestic demand growth “anemic.”

“Rather low private and public sector investment combined with subdued private consumption over a longer period contributed to modest growth, falling trend growth, increased dependence of the economy on external demand and the build-up of a sizable and persistent current-account surplus,” the commission said on Wednesday.

“Central policy challenges, therefore, are higher investment in human and physical capital, further strengthening of labor supply and promoting efficiency gains in all sectors of the economy, including by unleashing the growth potential of the services sector.”

Of the 13 other countries found to have macroeconomic imbalances, the commission cited France’s “deterioration” in the trade balance and in competitiveness; Spain’s “very high stock of private and public debt;” and Italy’s “very high level of public debt and weak external competitiveness.”

The commission gave Italy, where public debt rose to an estimated 133 percent of gross domestic product last year from 127 percent of GDP in 2012, a sterner warning by declaring the Italian imbalances “excessive.”

These “are ultimately rooted in the country’s protracted sluggish productivity growth and require urgent and decisive action to reduce the risk of adverse effects on the Italian economy and the euro area,” the commission said.

The imbalances of two other countries -- Slovenia and Croatia -- were also deemed excessive.

Slovenia, a euro member, faces risks stemming from losses in cost competitiveness, corporate debt overhang and higher government debt, while non-euro EU member Croatia has “vulnerabilities” arising from “sizable” external liabilities, declining export performance, “highly leveraged” companies and “fast-increasing” general government debt, according to the commission.

The commission stopped short of recommending that EU governments place Italy, Slovenia and Croatia in an “Excessive Imbalance Procedure,” saying it would re-assess that step in about three months. Such a procedure would bring the countries closer to possible sanctions of as much as 0.1 percent of GDP.

The other nations found to have imbalances are Belgium, Bulgaria, Finland, Hungary, the Netherlands, Sweden, the U.K. and Ireland.

The commission’s findings from all its imbalance probes will feed into the next step of European budgetary coordination due to take place in June.

[Bloomberg]

ekathimerini.com , Wednesday March 5, 2014 (14:07)  
All three bids accepted in regional airport tender
DEPA facing 100-mln-euro fine to Gazprom
Manufacturing start made easier
Fewer shut shops in Athens city center this year
Gov’t plays down delay of capital revamp projects
Infrastructure Minister Michalis Chrysochoidis on Monday played down calls by the European Commission for two EU-subsidized regeneration projects for the broader Athens area to be postponed,...
Papandreou proposal sparks war of words inside PASOK
Controversial comments by former PASOK chief and ex-Prime Minister George Papandreou, effectively challenging Evangelos Venizelos’s leadership, have rival factions inside the once-dominant p...
Inside News
SOCCER
EPO ends soccer suspension, Super League resumes
Soccer action will resume this weekend after the Super League convened on Monday, elected a new president and alternate president and sent a letter to the soccer federation that assures it t...
BASKETBALL
Olympiakos ends PAOK´s unbeaten run in Basket League
Olympiakos put an end to PAOK’s unbeaten run in the Basket League with an emphatic win at the Peace and Friendship Stadium, leaving Panathinaikos as the only team with a perfect record so fa...
Inside Sports
COMMENTARY
Extremism from a bygone era
There are times when we seem to be overcome by self-destructive madness. I hear various commentators and politicians speaking in extreme terms of a junta, of defections, gallows, collaborato...
EDITORIAL
No call for more games
Psychological warfare has been a part of the negotiations between the troika and Athens from the very start of the crisis. But the situation is much different now and troika decision-makers ...
Inside Comment
SPONSORED LINK: FinanzNachrichten.de
SPONSORED LINK: BestPrice.gr
 RECENT NEWS
1. EPO ends soccer suspension, Super League resumes
2. All three bids accepted in regional airport tender
3. DEPA facing 100-mln-euro fine to Gazprom
4. Manufacturing start made easier
5. Fewer shut shops in Athens city center this year
6. BoG plans single ‘bad bank’
more news
Today
This Week
1. Scientists expand excavation of ancient Amphipolis
2. Greek officials to meek troika chiefs in Paris to break review stalemate
3. EU said to plan 21 billion-euro risk-sharing fund for investment
4. Police seek to name man who opened fire with AK47 at Piraeus bar
5. Biden informs Anastasiades about content of talks with Erdogan
6. Greece to scrap need for permits in some 900 professions
Today
This Week
1. Double quake on Atalanti fault line rattles Greek capital [Update]
2. Biden heads to Istanbul amid tension over Cyprus EEZ violation
3. Anti-junta uprising anniversary to be marked amid tight security
4. Every age has its collaborators
5. Give Greece a chance
6. Carlsberg takes control of Greek brewer Olympic Brewery [Update]
   Find us ...
  ... on
Twitter
     ... on Facebook   
About us  |  Subscriptions  |  Advertising  |  Contact us  |  Athens Plus  |  RSS  |   
Copyright © 2014, H KAΘHMEPINH All Rights Reserved.