BBC Homepage World Service Education
BBC Homepagelow graphics version | feedback | help
BBC News Online
 You are in: Business
Front Page 
World 
UK 
UK Politics 
Business 
Market Data 
Economy 
Companies 
E-Commerce 
Your Money 
Business Basics 
Sci/Tech 
Health 
Education 
Entertainment 
Talking Point 
In Depth 
AudioVideo 

Friday, 2 March, 2001, 18:25 GMT
The German muscle in Europe
Woman holds up a deck of euros
Playing the right cards in the Eurozone.
Eurowatch, by BBC's economics reporter Jonty Bloom.

I was reading a newspaper article the other day that said that Germany and Italy combined accounted for half of the eurozone's economy.

This came as a bit of a surprise to me as I had thought that France and Germany combined made up half of the eurozone's economy.

So I looked it up and both facts are right, which is a sign not only of my own ignorance but also of the importance of Germany to the European economy.

It apparently accounts for 32% of the total gross domestic product (GDP) of the 11 countries in the euro.

Keeping growth going in Germany is therefore essential to the future economic performance of Europe.

At the moment things are going well with European growth likely to overtake American this year.

But that is more to do with the slowing down of the American economy than with any boom in Europe.

In fact Germany, although doing well, isn't booming by any stretch of the imagination.

A cut in interest rates might help, but the European Central Bank (ECB) is waiting to see that inflation falls below its target of 2% before risking a cut in interest rates.

Although the head of Economics at the Organisation for Economic Cooperation and Development (OECD), Ignazio Visco, believes that there is room for a cut in rates in the eurozone, the ECB is apparently more worried about the lagging effects of a high oil price and the weakness of the euro which pushed up prices last year.

But this is a nice illustration of the complexities and compromises of the eurozone.

Germany has for the last 50 years been tough on inflation but at the moment its' economy could probably do with cheaper borrowing to keep growth going.

But Germany despite making up a third of the eurozone's economy has only one vote on the ECB's board, just like everyone else.

Search BBC News Online

Advanced search options
Launch console
BBC RADIO NEWS
BBC ONE TV NEWS
WORLD NEWS SUMMARY
PROGRAMMES GUIDE
Links to more Business stories are at the foot of the page.


E-mail this story to a friend

Links to more Business stories