Current Account Surplus and National Preferences in the EU

Margarethe Hummel

Since Donald Trump introduced a series of new tariffs, current account imbalances (especially trade surpluses and deficits) have once again become a topic of public debate. The main focus is on the associated macroeconomic costs, such as the impact on domestic employment, as well as the resulting economic, technological, and geopolitical dependencies. Within the European Union, Germany's persistent current account surpluses since 2001 have been a defining feature, but despite criticism from other EU countries, the German imbalance remains unchallenged. In addition, criticism from EU countries has also recently been directed primarily at China's current account surplus. This dissertation project identifies and analyzes the preferences of EU national governments with regard to Germany's persistent current account surpluses in order to determine how and when governments decide to politicize imbalances. It quantitatively examines which countries and sectors outside Germany benefit from the German growth model, the driver of German current account surpluses. Furthermore, qualitative case studies are used to trace the preference formation processes of three EU national governments—France, Italy, and Poland. Finally, it aims to show how criticism of a current account surplus within the EU (Germany) has shifted to a current account surplus outside the EU (China) in order to refine the understanding of internal EU cohesion processes.