Brussels to put the spotlight on German current account surplus

Julian Harris
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THE EUROPEAN Union is launching an inquiry into the size of Germany’s current account surplus, following claims that the country’s strong exports may be causing imbalances across the continent.

Germany could potentially face a fine of 0.1 per cent of GDP – around €2.5bn (£2.1bn) – if the study finds that the surplus is excessive, and if the Eurozone state then ignores any recommendations made.

Yet European Commission president Jose Manuel Barroso was keen to play down such an outcome.

“A high surplus does not necessarily mean that there is an imbalance,” he said. “[But] we do need to examine this further and understand whether a high surplus in Germany is something affecting the functioning of the European economy as a whole.”

Germany has had a current account surplus in excess of six per cent of its GDP since 2007.

A weak euro can stoke Germany’s exports, but yesterday ECB official Peter Praet said in the Wall Street Journal that the prospect of negative deposit rates or even asset purchases could not be ruled out.