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Increasing wages increases consumption. Because 22% of consumption is imported in Germany – and because increasing wages doesn’t increase exports: if anything, the opposite – Germans having more money in their pockets will lead to them buying more foreign goods, reducing the current account surplus.
This won’t be easy to execute. There is a deep bipartisan consensus in Germany to maintain the status quo.
First, we learnt that the economy overall expanded by 0.3 per cent in July, significantly faster than the 0.1 per cent expected, and better than most of our main rivals. Next, we found out that the trade deficit narrowed slightly as imports fell. Finally, we learned that employment was at record highs and that wages were still growing at record rates.
How many times does this need to be restated? Germany desperately needs to change its economic model, now more so than ever as its own economy, that of the European Union, and the world as a whole, again teeter on the brink of recession.
Most of all, it needs to make itself more reliant on internal, domestic demand, and less on exports.
So, while the EU might well be the apogee of constrained democracy, constrained democracy has many facets. Moreover, the model of constrained democracy existed on a national level before the EU was created. Indeed, the EU can be seen as the grotesque extension of a flawed system that was first developed within nation states after the First World War. For instance, the model of independent central banking was pioneered in Germany before being transposed to the EU much later on.
EUROPE’S largest economy Germany could crash into recession as car manufacturing growth plummets and Brexit cripples exports, its central bank has warned.
Bundesbank said that lower consumer spending and softer overseas demand has caused the economic downturn.
Most important, the League leader will have to decide where he really stands on fundamental questions that he has dodged so far – from Italy’s economic policy to its place in the euro zone and the European Union. Before now he could blame his weak coalition partner, the Five Star leader Luigi Di Maio, or his technocratic finance minister Giovanni Tria for any difficulties. The easy ride is over.
The number of unemployed in Italy jumped by more than one million people between the start of the global economic crisis in 2008 and 2012, the national statistical agency Istat said Thursday.
A proposed new agreement on dealing with failing banks, hammered out in a lengthy meeting of finance ministers, was headed for a summit of European leaders on Thursday. Described as an „historic achievement“ by Italian Economy Minister Fabrizio Saccomanni, the single-resolution mechanism (SRM) agency is designed to prevent failures like the collapse of Lehman Brothers in 2008. Ban
In supporting the European banking union, Germany’s highest court reveals its anti-democratic heart.
(25.07.2019)
Yet Germany, which has a budget surplus and which can borrow money at sub-zero rates, doesn’t see the problem even as its own manufacturing sector contracts. Finance Minister Olaf Scholz told Bloomberg Television on Thursday, minutes before Draghi’s press conference, that he has no plans to loosen the country’s purse strings because it’s not “necessary or wise to act as if we were in a crisis.”
(28.06.2019)
France’s top contender for the presidency of the European Central Bank is appealing to Germans to treat him as one of their kind.
Speaking — in German — to an audience of family businesses in Berlin on Friday, Bank of France Governor Francois Villeroy de Galhau highlighted his cultural and ideological links to the country. He said he shares German values, such as solidity, stability and realism, and understands the nation’s fears over financing other countries’ debts.
(27.06.2019)
Respondents expect the deposit rate, already at a record low, to be reduced by 10 basis points to minus 0.5% in September. HSBC predicts a second cut of the same magnitude in December, and ABN Amro sees a second reduction at the start of next year. Money markets are pricing a 10-basis point cut in September.
(Published: February 17, 2018, 12:00 AM EST | Updated: June 28, 2019, 7:00 AM EDT)
On the eve of a meeting of European Union leaders to discuss the bloc’s top policy positions, Bloomberg’s poll of economists shows the Bundesbank president edging out his French rival Francois Villeroy de Galhau. Finnish central-banking veteran Erkki Liikanen tied with Villeroy for second place. Current Finnish Governor Olli Rehn took fourth, overtaking France’s Benoit Coeure.
French president Emmanuel Macron said arriving at the EU summit on Sunday that the decision on Mario Draghi’s successor at the helm of the European Central Bank will only be taken after the political posts such as the presidents of the EU commission and EU council.
The currency has been criticized for making economic planning for the developing countries of French West Africa all but impossible since the CFA’s value is pegged to the euro (whose monetary policy is set by the European Central Bank).[3] Others disagree and argue that the CFA „helps stabilize the national currencies of Franc Zone member-countries and greatly facilitates the flow of exports and imports between France and the member-countries“.[4] The European Union’s own assessment of the CFA’s link to the euro, carried out in 2008, noted that „benefits from economic integration within each of the two monetary unions of the CFA franc zone, and even more so between them, remained remarkably low“ but that „the peg to the French franc and, since 1999, to the euro as exchange rate anchor is usually found to have had favourable effects in the region in terms of macroeconomic stability“
CFA franc. These two words probably do not mean much to most readers, but they encapsulate one of the world’s most enduring – and little-known – economic experiments. In the simplest possible terms, the CFA franc is a currency used by 14 countries of Western and Central Africa, all of which are former French colonies.