It is surprising that the German current account surplus remains so high, despite the boom in private consumption. The weakness of imports, as the central cause of the surplus, is associated particularly with the persistent weakness in investment. If domestic companies with close foreign ties were to invest more in Germany, imports would be considerably higher. In this case, also the relationship between savings and investment, which determines the capital side of the current account, would tend more towards equilibrium.
So what is to be done? Demands are sometimes heard for Germany to boost wages and accelerate fiscal spending. Yet caution is advised here. In recent years unit labour costs in Germany have already risen a good deal more strongly than in the rest of the Eurozone. This is usually overlooked, especially outside Germany. On fiscal policy: More public infrastructure investment would be important, but a comprehensive stimulus package would overheat the German economy without noticeably helping the other Euro countries. Instead, it is key to markedly improve the conditions for investment in Germany, for example in connection with energy and labour costs. Additionally, in an increasingly uncertain international political environment, national economic policy must be all the more reliable. In recent years it has failed to live up to this requirement.