The crisis of Eurozone which seems to spread from Greece to elsewhere in Europe has become the most serious problem these days. Although a series of measures have been taken out by European Commission within two years after Europe’s debt crisis erupted, market and political uncertainty appears to be worse than ever. As the most powerful country in the European Union (EU), Germany could never evade the issue caused by the Eurozone Crisis.
Many critics advocate that Germany should expand financial aid to other EU countries which are suffering from fiscal crisis since Germany is the richest country in EU and the only one who could afford such a huge debt, however, most Germany’s citizens hold an opposite view. This essay will briefly analyze the current situation of Germany and discuss both views of this issue. Germany, as the most populous nation in EU, not only has the strongest economic system, but also dominates the European economy.
According to statistics, the GDP of Germany has taken up a quarter of total EU output and a third that of Eurozone. Owing to its powerful manufacturing industry and strict control of economic cost, Germany has been little influenced by the Eurozone Crisis so far. However the economic growth was obviously slower and almost stalled in the last two year. Based on this situation, one of the opinions proposed by advocators is that Germany could not underestimate the effects on its economy brought by Eurozone Crisis.
The economy of Germany would affect and be affected by the economy of other European countries, because the total income of Germany comes from exports, accounting for 50% of overall economy in 2011, and 60% among that benefited from the countries in Europe. In other words, the exports of Germany might suffer a certain decrease by reducing imports of other European countries while the austerity measures are implemented in order to resolve the crisis, which would consequently lead the Germany’s GDP decline in the long run.
On the other side, if other EU countries collapsed in this crisis and were forced to exit Eurozone, which means resurrecting of their original currencies, such as Italy reusing Lira or Spain reusing Peseta, the currencies they were going back to would surely have fallen sharply against the Euro. Then, the German products might be much more difficult to export because of being too expensive to be competitive. As a result, the GDP of Germany would suffer as well.
However, a majority of German citizens hold the view that German government should not make a further payment for other countries by using German taxpayers’ money, since Germany has sacrificed enough for Eurozone. It is the fact that the level of consumption in Germany has been quite low and the per capita income has grown extremely slow by almost 2% per year over the last years in order to control the deficits. By contrast, some other countries in Europe have raised average income by more than 10% along with high welfares when German people were suffering from the reduction of welfare and a sluggish salary.
Thus, it is unfair for German to bail out a country and help its indolent citizens to enjoy a luxurious life through their own suffering. In addition, it is impossible for Germany to solve the debt crisis thoroughly by constantly providing finance for other countries, which seems like a bottomless pit. The national debt of Germany has increased to €2 million until 2011, accounting for more than 80% of GDP , which has exceeded the stipulated 20% of the percentage in Convergence Conditions. In other words, if Germany continued to give financial assistance to other countries, it might have to struggle to reduce its own debts.
In general, Germany should provide financial assistance to other countries, but not to the extent of sacrificing itself and aggravating its own debts. Perhaps, Germany could provide other forms of aid such as establishing a scientific welfare system, introducing an advanced industrial technique or offering a better banking regulatory framework rather than just financial assistance. After all, it is not the Germany’s responsibility to resolve the Eurozone Crisis. The countries that were plunged into crisis should take responsibilities for themselves.