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EU's Rehn warns Germany over trade surplus

EU's Rehn warns Germany over trade surplus
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The EU is warning that Germany’s trade surplus – when a country pockets more for exports than it spends on imports – could hinder Europe’s recovery.

Officials say Berlin must boost wages and stimulate domestic demand.

Olli Rehn, the EU economics commissioner hinted Germany may even face a Commission probe for breaching an EU rule on excessive trade surpluses.

“We will discuss this question next week,” Rehn told reporters in Brussels after the public of the EU’s executive’s latest economic forecasts.

EU economists predict the eurozone will grow from next year.

They reckon it will shrink by 0.4 percent this year, before expanding by 1.1 percent in 2014.

That will rise to 1.7 percent in 2015, the report said.

The commission also expects the north-south divide to persist in terms of unemployment.

Greece (27 percent) and Spain (26.6 percent) will still have the highest rates of joblessness this year, whilst Austria and Germany will have the lowest.

“The situation of youth unemployment in many EU countries especially in the southern periphery is as worse as it was a year before or even worse,” said Jannis Emmanouilidis of the European Policy Centre.

“So we see a crisis which is moving from different phases into maybe a calmer phase but it’s not gone.”

Euronews’ Efi Koutsokosta says the European Commission will unveil specific recommendations next week on how to correct economic imbalances across the 18-member single currency area.