Martin Sandbu (Opinion, March 10) is absolutely right in arguing that Germany’s structural change in favour of more investment “may help reorient the EU’s export surplus towards investment at home”.
Better, of course, if done via eurobonds rather than exemptions from the new growth and stability pact. But the fact remains: Europe should reorient its mostly neo-mercantilist competitive model of current account surpluses based on low investment and low wages to a different one, based on stronger internal demand, higher investment and higher wages. This would strengthen Europe’s industrial base and restore its long-term competitiveness on a higher level.
Easier said than done, of course. But that’s the only reasonable road ahead. Incidentally, this would also be Europe’s better response to Donald Trump’s tariffs. But it would be not just in the European interest. It would also be in Trump’s interest inasmuch as it would help reduce Europe’s current account surplus towards the US for which Trump has a fixation.
Is there still room for co-operative and reasonable solutions?
Giovanni Farese
Professor of Economic History, European University of Rome, Rome, Italy
