DThese questions are posed today with acuteness for the euro zone. The first is to know how to support the reform program that the Europeans have adopted: the Letta (on the internal market) and Draghi (on competitiveness) reports offer the European Union an ambitious roadmap, with a view to making of the old economic integration project the vector of a new dynamic of modernization and recovery. However, experience shows that the chances of success of such a program depend crucially on the macroeconomic environment in which it is implemented.
The second question is how the euro zone will respond to Trump: the one who will take office in less than a month in the White House has made no secret of his intention to attack the external surpluses of trading partners of the United States. However, for fifteen years, the euro zone has been accumulating balance of payments surpluses. In 2024 again, it is preparing to record a current account balance well above 3% of gross domestic product, and its net foreign assets (the stock of assets abroad minus debts to non-residents) now exceeds 1,000 billion euros. Donald Trump, who views these subjects from a narrowly mercantilist point of view, will certainly put pressure on Germany, in particular, to reduce its surplus.
Reallocate savings
These two questions are closely linked. For around fifteen years, the euro zone has acted as if it could count on its trading partners to drive its growth, without having to promote it itself, and it has massively exported its savings to the rest of the world, in particular to the United States. In doing so, it behaved like a small open economy, which it obviously is not. Of course, not all countries fall under the same analysis: France, in particular, has long had a marked deficit in its external account, and it is therefore a net importer of savings. But Germany, the Netherlands, the Scandinavian countries and even Spain today record considerable external surpluses, which they invest in the American financial market.
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Source: Lemonde