Sunday, September 26, 2010

Is the German Political Economy Shifting?

. Sunday, September 26, 2010

From Bloomberg:

German workers are mobilizing to fight for a bigger share of the export-driven recovery, arguing that wage raises are necessary to spur consumer spending in Europe’s biggest economy, an IG Metall union leader said. ...

While exports give Germany a “very strong leg to stand on,” increases are justified because the recovery is at risk without consumer spending, Schwitzer said. “If you’re only standing on one leg, you start to limp,” she said. “The second leg, domestic spending, has to be strengthened.”

Pressure is building for pay raises in Germany after years of belt-tightening. The U.S. Treasury, the European Commission, French Finance Minister Christine Lagarde and billionaire investor George Soros have all urged Chancellor Angela Merkel’s government to bolster consumption and rely less on exports to aid recovery in Europe and globally. ...

The government should use its trade surplus, the European Union’s biggest, to “foster domestic demand and ease reliance on exports that are contributing a huge trade imbalance on the euro-zone’s periphery,” said Juergen Kroeger, a director in the EU Commission’s Economic and Financial Affairs department.

“Why aren’t we paying people higher wages in this country?” he said Sept. 13 in Berlin. “That might be a start.”

Via Alex Harrowell at AFoE.


Is the German Political Economy Shifting?




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