German surplus could be harming rest of Europe, says Commission
Germany's status as Europe's industrial powerhouse could be damaging the single-currency bloc, the European Commission has said, as it opened an investigation into whether the country's large trade surplus was hindering the recovery on the continent.
Germany, which represents Europe's biggest economy, was one of three countries singled out for an "in-depth review" by the EC's Alert Mechanism Report.
The commission said Germany's large current account surplus, to which most of the eurozone's positive balance can be attributed, "may put pressure on the euro to appreciate vis-a-vis other currencies".
It added: "In case such pressures materialise, this would make it more difficult for the peripheral countries to recover competitiveness through internal depreciation."
Brussels insisted that it was not criticising Germany's economic success.
"The issue is whether Germany could do more to help rebalance the European economy," said Jose Manuel Barroso, the president of the EC.
Olli Rehn, the commissioner for economic and monetary affairs, added: "Let's be clear, we are not criticising Germany's external economic competitiveness, or its success in global markets, in fact, that is what we want from all EU member states."
But Mr Rehn said Germany's "persistent high surplus also means that Germans are persistently investing a large part of their savings abroad".
He said: "The question is whether this is efficient, even from the German perspective."
The EC also fired a warning shot at Britain, and said rising house prices would restrain households' ability to cut debt.
The commission highlighted Britain's unbalanced recovery.
According to statistics from Eurostat, Britain's share of world exports declined by 19pc between 2007 and 2012.
The EC said levels of government debt in the UK remained a concern, while the "ongoing balance sheet repair of the financial sector and the persistent scarcity of credit for smaller firms may continue to hold back economic growth".
EC data last week predicted that Britain's commercial deficit will be the highest in a quarter century next year, at 4.4pc of GDP.
Meanwhile, Luxembourg, and Croatia were added to the EC's watch list. (© Daily Telegraph, London)