Germany Needs To Get Its Economic Act Together

BY JOHN BRUTON

MARCH 27, 2015 

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Citizens of the eurozone should pay close attention to economic policy debate about Germany.

Simon Tilford, deputy director of the Centre for Economic Reform, has some critical things to say about Germany’s economic policy in a recent publication. He says Germany is not serving its own economic interests by running a large balance of payments surplus. A country with such a surplus must reinvest abroad, and he says Germans have lost almost a third of what they invested internationally since 1999. This is because they put the cash in property bubbles that burst and other poorly chosen investments.

Tilford says Germans would have been better off investing at home. German money has gone into ghost estates in foreign countries instead of research and development, and roads and schools in Germany itself. That would have boosted German wages, spending and imports.