On the first sight, it would appear Germany is taking
the lion share of benefits arising out of her relationship with the European
Union as a whole. But deep analysis indicates both are driving benefits
quantitatively and qualitatively as members of the Union. Here are the facts:
Understandably, overall score is not exactly at
50:50. For example, Germany posits as the largest trading partner accounting
for almost 25% of the total EU-GDP, mainly due to her size and population
spread. In terms of area she is sixth largest but population of more than 85
million people grants her greater buying and selling power. Furthermore, her
contribution to the EU Budget alone is a staggering: € 20 Billion per annum, highest among the members.
When it comes to the profile as investment provider
Germany stands tall. She is the largest investor providing more than € 410
billion as FDI to fellow members in vital areas including but not limited to manufacturing,
infra-structure development and financial services that has the potential to improve
quality and competitiveness of the recipients. Chief areas receiving this largesse
include green energy, digitalization and R&D. on the reverse side members who
receive assistance are perhaps reduced
to play the role of supply chain facilitators to German firms.
Despite fairly sluggish economy experienced in
2026, Germany continues to attract human resource talents from across the
entire European Continent. While this enhances German productivity it also makes other members to suffer from
brain drain.
A key point to ponder is the under-valuation of
Euro as common currency. Assume Deutsche Mark is still the currency of Germany
then German export to Union would be fairly expensive resulting in low demand
for the country’s products. Even if that happens, Germany would be on the top,
because German banks
would provide export finance to German firms and at the same time import
finance to buyers in other countries in Europe. Annually, Germany gets an incremental
inflow of cash from Europe to the tune of € 170 Billion, enhancing her GDP.
Yet another pointer, which is often ignored, is the
application of the measure considered to be the ultimate arbitrator of fiscal
health. Under EU fiscal rules, member states must maintain an annual government
budget deficit below 3% of their GDP, to ensure sustainable public finance and
economic stability. Union members who brace it would be put on a rigorous
reformative programme. Today
there are 11 such members, Italy being the latest addition to the dog house.
Rumania is the badass with 7.9%. There are good boys too. Cyprus is at top
notch with +3.4. Germany posits at minus 2.7% and is still in the safe zone.
My conclusion
That said, even though Germany is said to amass
quite large benefits from the European Union, she also follows a grandeur policy of give and take.
In sum, Germany has mastered navigating strategy amid geoeconomics in managing her
finance and fiscal portfolios on an even keel.
Cheers!
Muthu Ashraff Rajulu
Strategy Adviser
Mobile: + 94 777 265677
E-mail: cosmicgems@gmail.com
Blog: Strategy Adviser
No comments:
Post a Comment