Policies which reduce the current account surplus by strengthening domestic demand
and making the services sector more attractive for investment would have positive
spillovers in the context of subdued economic growth in the euro area and world-wide,
supporting adjustment in deficit countries at a lower cost in terms of output foregone.
Addressing the structural reform priorities set out below would not only increase
Germany’s potential growth but also reduce its external imbalance to some extent. This is
particularly the case for policies that stimulate investment, such as regulatory reforms that
reduce barriers to entry in service sectors.
Removing barriers for full-time employment of
women would reduce poverty risks and could thereby lower precautionary household
Pension reforms which lengthen working lives would also lower saving as
households would have more years to accumulate wealth for their retirement (Kerdrain
et al., 2010). Energy tax exemptions for energy-intensive, export-oriented manufacturing
firms have protected profitability.