Germany has come in for criticism. This is not – as in many other countries – an accusation of protectionism. Instead, it is Germany’s strength in exports that Washington and Brussels object to. They complain that Germany’s trade surplus is maintaining the existing imbalances in Europe, while the country’s domestic demand is too weak. Are the accusations justified? Or is this simply the notion that if the neighbours are doing worse, I’m doing better?
Let us consider the facts: the trade surplus is not a result of political interventions in the market, but of competitiveness that, however, needs working on every day.
Very dynamic innovation and first class quality, linked with long-term internationalisation – these are the key factors that have made German industry successful over the years. We are not only speaking of a few major corporations. It is principally the small and medium-sized companies that have always ventured beyond national borders and onto the world markets. Germany has twice as many firms active in exports as France does, for example.
The German automotive industry oriented itself on the growth markets at an early stage and did not limit its activities to Europe. Now we take over 20 per cent of the Chinese new car market, while in the USA one new passenger car in eight is from a German group brand. In both regions we produce most of these vehicles locally. Some of our competitors in neighbouring countries have tended to concentrate on Europe – and are now really feeling the pinch of the current weakness on this market.
Is Germany’s export strength now damaging our neighbours? Actually the opposite is the case. Germany has become the engine driving Europe’s economy. If German exports rise by ten per cent, upstream imports from EU partner countries increase by nine per cent. Germany has far higher per capita imports than France. Since 2007 Germany’s current account surplus with the euro zone has more than halved.
Those who criticise Germany for feeble demand at home are failing to recognise the situation. In fact, stable employment and appropriate wage settlements cause domestic demand to climb. This is one reason why Germany’s tax revenues are currently high. However, we are concerned about prosperity and employment being jeopardised. Energy prices are rising, unit labour costs are also climbing again, and some people want to increase taxation. As an industrial location Germany is anything but invulnerable.
Competitiveness does not come about by one country being “punished” for its export activities, but by creation of the conditions needed for growth and rising employment – in as many European countries as possible. Most importantly this includes structural reforms and budget discipline in every single country. The recipe is to strengthen the weak, not to weaken the strong. If Germany is expected to demonstrate economic solidarity with its European partners, the capability of our country should not be called into question.