Letter to the Times: GR Steele comments on alternatives for economic growth
Published 25 May 2012
The Times has published a letter from GR Steele of the Department of Economics, in which he comments on Germany's eurozone exports and alternatives for economic growth.
“When challenged to explain why German taxpayers should continue to support profligate eurozone sovereigns, Christine Lagarde is among many who point to Germany's eurozone exports. Many companies certainly profit in that wasy, but their exports are effectively financed by the German exchequer. With bailouts and the continuation of open-ended Target2 credit from the Bundesbank, other eurozone countries are paying for German imports with money borrowed from Germany which may or may not be repaid. It is not obvious that this is a good deal for Germany.
“An alternative suggestion is for German wage rates to be increased. While higher domestic demand and unit costs might displace exports, what assistance would that provide to nations whose capacity to produce requires structural reform?”
Reader in Economics
Lancaster University Management School