European Recovery: The Role of Germany Madrid, September 30, 2014 Dr. Michael Dauderstädt

Europe‘s Growth compared 2008= : USA: 109,6 UK: 104,9 Eurozone: 102,3 EU: 104,6 Germany: 109,3 World: 129,8 Source: IMF

Nominal GDP-Growth (in €) Latvia191,7-18,1+ 26,7 Lithuania180,6-16,8+ 31,0 Estonia168,9-14,0+ 25,0 Poland93,9-14,7+ 22,2 Romania261,1- 15,4+ 12,7 Hungary114,3-13,3+ 7,7 Czech Republic138,7-8,1+ 7,4 Bulgaria170,6017,4 Slovenia70,4-6,0-0,6 Slovakia190,2-2,513,8 GIPS: Greece65,1-1,4-16,1 Ireland44,2-10,7-0,3 Portugal29,6-1,9 Spain53,2-4,6-2,2 New Member States (CEE)158,0-10,9+16,3 12 Richer Member States30,5-6,4+ 10,5 EU 2731,6-6,4+ 8,9

Germany‘s responsibility No common approach to the banking crisis No common approach to the recession Blocking ECB and EU when the Greek bond panic emerged (spring 2010) No lender of last resort, no euro bonds Reluctance towards rescue operations Insistence on austerity

Germany‘s trade with „problem“countries (percentage change ) CountryGerman Exports German Imports Balance France6,91,119,0 Greece-40,9-12,1-50,6 Ireland-3,4-44,3-65,8 Italy-14,20,7-60,2 Portugal-21,826,1-69,6 Spain-26,614,4-65,2

Germany‘s changing trade pattern Share of German total exports Share of German total imports Share of Germany‘s total export surplus Europe74,668,570,570,793,258,4 EU63,657,057,357,492,055,0 Eurozone42,936,839,238,360,030,4 Spain4,32,92,6 12,33,9

German FDI abroad (Mio €) Target area Growth World ,6 Europe ,8 EU ,7 Euro area ,8 Spain ,8 Caution: Luxemburg and Netherlands dominate EU and Eurozone amounts

Migration (20 EU countries)

Migration 20 EU countries (Spain not included): Balance moved from in 2008 to in 2012 Growth of entries: 73.1% Growth of exits: 3.6% Greece: Entry growth: 290.9%; exit growth :-26.5% Portugal:Entry growth: 94%; exit growth :- 20.6%

German peculiarities Inflation panic (the wrong shadow of 1923) Obsession with competitiveness Export orientation German surplus Loss in foreign investment position (devaluing accumulated surpluses) Germany should support a less supply- side-biased European growth policy

Germany‘s Trade Development Westgermany Unified Germany

Sector accounts in Spain (in % of disposable income)

Sector accounts in Germany (in % of disposable income)

Towards a European Recovery Monetray policy must remain expansionary and fight deflation Banking sector must be cleaned up Rebalancing imbalances Fiscal stance must be corrected More European fiscal power: Euro bonds, european taxes; European unemployment insurance European investment: energy, transport

Friedrich-Ebert-Stiftung – Abt. Wirtschafts- und Sozialpolitik 15 Thank you for your attention