Despite costly bailouts, Germany still benefits from the euro: Study
Even if Germany had to write off the loans it extended to Southern European countries as part of the eurozone’s emergency rescue measures, the economic advantages of its membership would still be overwhelming, according to a recent study by the Bertelsmann Stiftung.
The bailout programmes adopted to rescue Greece, Portugal and Ireland from bankruptcy have engrained the notion in the German public of their high cost to taxpayers. An opinion poll conducted in the summer of 2012 showed a whopping 65% of respondents would favour returning to the Deutschmark.
Yet, this overlooks the huge benefits derived from Germany’s euro membership, according to a study published by the Bertelsmann Stiftung on 30 April.
“Without the euro, growth of the real gross domestic product [GDP] in Germany would be lower by about 0.5 percentage points per year,” the study says, warning that without the euro, Europe “would fall apart politically” and become “a losing player in international competition.”
And projections for the future are looking bright, the study adds. “Adding up the growth benefits of euro membership results in a profit of nearly €1.2 trillion between 2013 und 2025.” For every German citizen, this represents an average extra income of “about €1,100 per year" during that period, according to the study.
The figures from the Bertelsmann study were based on some of the less immediately tangible advantages of euro membership. For example, "Germany's membership in the currency union reduces costs for international trade and protects it from strong exchange rate fluctuations," said Aart De Geus, chairman and chief executive of the Bertelsmann Stiftung.
“This means that even if Germany had to write off a large percentage of the loans that it has made available to the heavily indebted states of southern Europe as part of the various euro rescue measures, the economic advantages of its membership of the monetary union would continue to predominate.”
The study comes amid a perception of growing disenchantment among the German public about the country's euro membership ahead of a general election in September. Last month, a new anti-euro party, the Alternative for Germany (AfD), held its founding congress, the strongest signal yet that support for Europe and its ailing currency may be wearing thin among the German public.
However, opinion polls are not always clear-cut and also illustrate a certain ambivalence towards the euro. A survey published today (3 May) by the ARD broadcast network showed 58% of German respondents believe the government should do everything to save the single currency. And Some 76% said they believe the euro will weather the current crisis.
- 22 Sept.: German elections