A joint report by the leading German institutes, or "Wise Men", said the country's external surplus would keep rising to a modern-era high of 7.9pc of GDP this year, far above the 6pc limit set by Brussels under the new Macroeconomic Imbalance Procedure.


Germany first agreed to the new procedure thinking it would be used to punish deficit countries living beyond their means, or to prevent credit booms, deemed to have been the causes of the EMU crisis. German officials seem taken aback that Brussels would also look at the other side of the North-South trade gap.


The ... US criticism is that Germany has locked in a structural advantage through EMU, which prevents Germany's currency rising as the D-Mark used to do. This creates a permanently under-valued exchange rate. It not only hurts Club Med but it also has secondary effects on non-EU countries

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