The European Commission announced on Wednesday it will launch an investigation into Germany’s economy. The EU executive fears the high current account surplus of the biggest economy in Europe may be damaging the eurozone economy.
The announcement came after the US critised Germany, accusing Berlin of relying too much on exports and not doing enough to raise demand at home, which could hamper Europe’s economic stability.
But Commission president Jose Manuel Barroso said that the in-depth analysis of Germany’s economy is not an attack on the country’s competitiveness.
Germany has had a high current account surplus for the last 3 years. In September, the surplus reached almost € 20 billion and it is the highest in the world.
The investigation is part of the so-called Alert Mechanism Report. Under the new rules, the EU’s executive is in charge of checking that Eurozone countries do not run economic imbalances.
‘The European Commission is setting the top five economic priorities that should guide Member States when they design their budgets and economic reform plans over the next year. But this year is also different. This year, budgetary coordination in the euro area has gone to a new level. This year, for the first time, Member States have sent us their draft budget plans before they are adopted’, European Commission’s president José Manuel Barroso.
If the Commission’s review concludes that the surplus is causing imbalances to the German and European economies and Berlin ignores the recommended steps to fix the problem, it could be fined 0.1% of GDP.