Merkel Says ‘Weak’ Euro Partly to Blame for German Surplus

  • Euro rises after chancellor’s comments on trade, aiding Macron
  • German leader cites low oil prices, need to invest at home

Chancellor Angela Merkel blamed a “too weak” euro for part of Germany’s trade surplus, telling a group of students that bolstering domestic consumption was the best way to address imbalances with countries such as France.

In a panel discussion that included talk of building a closer relationship with French President Emmanuel Macron, whose election Merkel called an “extraordinary event in French politics,” Merkel was asked how to deal with the trade imbalance between the two nations. Part of the blame goes to European Central Bank monetary policy, she responded.

“The euro is too weak -- that’s because of ECB policy -- and so German products are cheap in relative terms,” Merkel said in Berlin during a school visit on Monday. “So they’re sold more.”
Seeking to build on Macron’s election, the two sides said German and French 
finance officials will now prepare a set of proposals, including ways to reduce 
differences in corporate taxation, for discussion at a joint cabinet meeting in 

The chancellor’s macroeconomic discussion followed an outline of the European Union’s challenge in overcoming the U.K.’s exit from the bloc, which Merkel laid out to the students. She said her main policy goal will be to keep the EU’s 27 remaining member states together and to ensure that the region prevails economically.


That means needing “to help Macron so he’s successful,” Merkel said. Her finance minister, Wolfgang Schaeuble, also laid out plans to ramp up Franco-German cooperation and strengthening the euro area. He spoke Monday alongside French Finance Minister Bruno Le Maire, who made his first visit to Berlin since the French election.

“We know that strengthening the currency union is of particular importance,” Schaeuble told reporters. “Both of us believe that Germany and France have a special responsibility to take the lead.”

Merkel took up Franco-German trade relations to illustrate how greater consumption at home could reduce imbalances, with more Germans buying French products as a way to bolster imports.

“But of course that requires that things are produced in other countries that will be of interest to Germans,” Merkel said. “I can’t force people to buy a Renault instead of a VW. We can’t legislate that.”

The euro jumped on Merkel’s comments, climbing 0.36 percent to as much as $1.1246 in Frankfurt. The joint currency had fallen to $1.1162 earlier Monday.

A lower oil price was also partly to blame for the surplus, Merkel said, reducing the cost of imports to Europe’s largest economy. If oil were 50 percent more expensive “then we’d soon have a lot more imports.”

— With assistance by Helene Fouquet, and Chad Thomas

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