The European Council on Foreign Relations

€ view: Is Germany’s love for brutal austerity waning?

Date: 10th May 2012 | Author: Sebastian Dullien,

Categories: € View,

This week, I was invited to a public hearing on the economic impact of the euro crisis held at the German Bundestag. These hearings in the German Bundestag are a very peculiar exercise. Each party represented in the Bundestag is allowed to propose some experts who are then invited by the Bundestag administration. In addition, several other stakeholders are invited. As this particular hearing took place in the finance committee of the Bundestag, among the groups represented were the German employers’ federation, the federation of German unions and the Bundesbank.

In my hearing, there were also well known (rather conservative) German economists such as Clemens Fuest, designated head of the Mannheim ZEW institute and Claudia Buch, a member of the German council of economic advisors. From the progressive side, there were people like Gustav Horn the director of the Dusseldorf based

€ view: good and bad news on current account imbalances

Date: 17th April 2012 | Author: Sebastian Dullien,

Categories: € View,

I spent the second half of last week at the conference of the Institute for New Economic Thinking (INET) in Berlin. The central policy topic was – of course – again the euro-crisis. While the vast majority of speakers agreed that the crisis was much more than a simple fiscal solvency crisis (in contrast to what sometimes has been discussed in some German media), there was disagreement on the question how the underlying balance-of-payment crisis could be solved. Interestingly, there were already vastly different claims on what really is going on at the moment in terms of adjustment in the euro periphery. While one speaker claimed that “unit labour costs in Spain continue to rise more quickly than in Germany” another speaker claimed that “in the 2.5 years since the onset of the crisis, Spain has regained already a third of the competitiveness lost in the decade before”.

In fact, the

How the battle for Europe is lost in Germany

Date: 20th March 2012 | Author: Sebastian Dullien,

Categories: € View, Germany in Europe,

Over the past months, my ECFR colleague Ulrike Guérot and I had a lot of discussions on whether the euro could still be saved or not. However, many of our discussions focused not on economics, but on the question whether it was still possible to convince the German public that the euro is worth saving. In general, I have been more optimistic than Ulrike. I believe in the power of the intellectual argument - and in the benefits of the euro for Germany. It was clear to me that ultimately the argument for the euro could and would be won.

This weekend, I had an experience which makes me wonder whether my optimism might not have been misplaced. For reasons beyond this blog, I had the opportunity to spend the past weekend with my wife and a couple of friends from Frankfurt in the Spanish town of Cádiz, where exactly 200 years ago the first Spanish constitution was promulgated (side

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€ view: weighing up ordoliberalism

Date: 12th March 2012 | Author: Sebastian Dullien,

Categories: € View, Euro Crisis, Germany in Europe, Reinventing Europe,

The publication of our ECFR policy brief – ‘The long shadow of ordoliberalism: Germany’s approach to the euro crisis’ – a couple of weeks ago has triggered a broad debate. The ideas themselves were widely discussed (see, for instance, Business Week and the Irish Times), and an opinion piece in The Guardian led to hundreds of comments from readers. The ordoliberalism theme was also picked up in the blogosphere (see NPthinking, the European Tribune and Mainly Macro)

I was actually quite surprised by the emails and phone calls that I received from journalists who wanted to discuss the paper. Most German economists who were educated in the 1990s have come across the term ‘ordoliberalism’, but it seems to have drawn a complete blank outside the borders of Germany. By this I mean not only that few economists follow this paradigm, but that very little is know about it: even economists who

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The ‘Fiscal Compact’: Much ado about nothing

Date: 16th January 2012 | Author: Sebastian Dullien,

Categories: € View, Euro Crisis, Germany in Europe,

Before S&P dropped the bombshell on Friday that France and Austria were losing their Triple-A-rating, most of the crisis reporting last week had been concerned with the different drafts for the new “Fiscal Compact” Treaty to be signed at the euro summit at the end of January. Government officials and legal experts across Europe were busy putting the promises made at the December summit into legal language and making it compatible with the existing EU treaties. ECB board member Jörg Asmussen, always a good representative of the mood in the German central banking scene, in the meantime, wrote a furious letter denouncing the draft as “substantially watering down” the initial promises made.

So what was in the latest draft which was really surprising or new? The answer is: Not very much. Even though Angela Merkel had been busy selling the treaty as an important step forward, the

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