If the anxiety of inflation has not disappeared through the Rhine, a new generation of more pragmatic economists has gained influence.
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Another anniversary that falls badly. Twenty years after the introduction of the Euro Fiduciary, Germany is precisely struggling with the greatest risk since the abandonment of Deutschemark: the depreciation of the currency. In November, inflation has crossed the bar of 5.2% over a month, its highest level for nearly thirty years.
In the popular and conservative press, the illustrations of a 1 euro part in the process of melting have redone their appearance, classic symbol of the erosion of the savings of the “small saver”. Critics against the ultra-accommodative policy of the European Central Bank, similar to a quasi-financing of States, have become more virulent.
The Germans, as a whole, would have enough to rejoice: they undeniably part of the big winners of the euro. In 2019, A study of the European Policy Center concluded that it is Germany who had the most benefited from the introduction of the euro. The country, very dependent on foreign trade, has benefited from the single currency to remove its transaction costs in the euro zone, and to sell its products cheaper outside therefrom, thanks to a favorable currency effect. This effect is found only in the Netherlands, another large country of export.
Italy and France, the opposite, are the two countries that have suffered the most important prosperity losses. Their economies, deprived of the instrument of currency devaluation, have not been able to find their competitiveness inside the euro zone, explain the authors. But this thesis is discussed. A Study published in 2019 by the Institute for the Global Economy of Kiel concludes that Germany is neither the only nor the greatest beneficiary of the euro. “The smaller a country, the more it benefits from the single currency,” writes Gabriel Felbermayr, co-author of the text, which believes that the small economies, which depend more on the exchanges than their internal market, have benefited a lot from the decline in Transaction costs.
Evolution in progress
If the controversies remain strong, it is also that opinions differ on how to compensate for imbalances, undeniable, within the European Union. Traditionally, Germany is attached to the economic theory of “Ordoliberalism”, which promotes a strict independence of the central bank, which is limited to ensuring price stability. The imbalances should therefore be corrected solely within the countries, by structural reforms leading to higher competitiveness, not by the monetary instrument or the common debt.
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