Nov. 21 (Bloomberg) -- Chancellor Angela Merkel rebuffed international criticism of Germany’s trade surplus as an “absurd” position based on “fairy tale” assumptions.
“We can’t and won’t let anyone artificially reduce Germany’s competitiveness,” Merkel said to applause at a conference in Berlin today. “This can’t be what a successful Europe is about.”
The chancellor was responding to a probe of Germany’s current-account surplus by European Union regulators, who said it may cause the euro to appreciate and urged the country to boost consumer spending. Merkel said Germany’s “meager growth” is driven “almost exclusively” by domestic demand.
Merkel has faced down calls by the International Monetary Fund, the U.S. Treasury and the Social Democratic Party, her prospective coalition partner, to shift her focus from debt reduction and balancing the budget toward easing the EU’s economic imbalances. Even so, the SPD and Merkel’s Christian Democratic bloc agree in rejecting perceived pressure from the U.S. and European partners to restrain German exports.
“I think it would be absurd if we were to try make German companies reduce production or cut back on quality,” Merkel said today. “It’s also a fairy tale that workers in German export industries are badly paid.”
Most of Germany’s trade surplus is based on exports to emerging economies, she said. “So it’s questionable whether we can exert much influence of our own over the situation.”
While signaling she’s ready to drop her opposition to the SPD’s demand for a nationwide hourly minimum wage of 8.50 euros ($11.45), Merkel again rejected tax increases sought by the Social Democrats, saying they would threaten consumer spending.
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