. They expect exports to roar back and lift Germany's current account surplus from 4.2pc of GDP last year to 7pc this year, returning to mercantilist business as usual. Their view matters because Germany currently sets eurozone policy: through finance minister Christian Lindner at the Eurogroup, the real government of Europe; and through the ECB's Isabel Schnabel, who wants monetary overkill as an 'insurance' policy against lingering inflation risks. But has she overlooked the opposite risk that the world will not oblige? This reliance on somebody else's fiscal stimulus is the mindset of a mid-sized country. It is a recipe for stagnation in a large monetary union that conducts most tra){kind=link}
The assumption the bloc can trade its way back to health is a recipe for stagnation
Europe has subcontracted its economic fate to the rest of the world yet again. It is gambling that America and China will lift global demand enough to pull the eurozone out of stagnation, before this downturn tips into something closer to a protracted depression.
The strategy worked badly after the Lehman crisis in 2008. It is likely to be even less successful this time.
America is spreading its largesse behind the wall of Joe Biden’s protectionism, and China is caught in a Keynesian liquidity trap with the paralysing symptoms of debt deflation.
The European Central Bank has raised rates by 450 basis points in barely more than a year, and into the teeth of an industrial recession, now spreading to services across the eurozone big four.