Stubbornly Germany first: options for reducing the world's largest current account surplus

Abstract

Germany continues to be a major exporter of both goods and capital. In 2018, the current account surplus - at about $340 billion - will continue to be the world’s largest. Whilst German policy-makers and society celebrate the surpluses as the result of the competitiveness of German companies, they persistently ignore the other side of the balance of payments. Germany finances consumption and investment - abroad. The repeated explanations of the German government - arguing that the surpluses reflect private decisions that cannot be influenced by government policy - are not convincing. The German government has many options to reduce or raise taxes and can shape incentives to save or invest, but prefers to ignore these opportunities. Whilst many German observers eagerly point to the self-interested economic policies of the United States, Germany itself continues to place its own interests above the legitimate concerns of both its European and Atlantic partners. A continuation of the "Germany First" economic policies of the past two decades would constitute both a burden for European integration and the global trading system. (Autorenreferat)