EU probes Germany over high trade surplus

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EU probes Germany over high trade surplus

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The European Commission is investigating where Germany’s huge trade surplus breaches EU rules.

A trade surplus is when a country pockets more for its exports than it spends on imports.

Officials in Brussels say it may be hampering growth across Europe.

“We do need to examine this further and to understand whether the high surplus in Germany is something that is affecting the function of the European economy as a whole,” said European Commission president Jose Manuel Barroso.

The agreed EU limit for a member state’s trade surplus is six percent of GDP. Germany’s currently stands at seven percent.

“A persistent high surplus also means that Germans persistently are investing a large part of their savings abroad. the question is whether this is efficient even from the German perspective,” said Olli Rehn, EU Economic Affairs Commissioner.

Critics say Germany’s export model is dampening consumer demand elsewhere in the eurozone, increasing the risk of deflation.

They also argue it is contributing to an strong euro, which is hampering exports from other eurozone countries.