Green economy  |  Publications  |  01.06.2012

No stabilisation of the euro without a Green New Deal

German Green MEP Sven Giegolg shows in this report how high costs of imports have also strongly contributed to net new borrowings of several EU member states and are therefore threatening the stability of the eurozone.

Instead of focusing to much on the lack of competitiveness struggling countries like Spain, Portugal or Greece are facing, this report highlights the way crisis countries live beyond their ecological means, and why this is a major factor against the stabilization of the eurozone.

Between October 2010 and September 2011, the 27 EU Member States had to pay EUR 408 bn for their imports of fossil fuels and other finite raw materials. In comparison: during the same period of time, the current account deficit of the EU-27 amounted to EUR 119 bn, underlines this report.

This working paper shows that it is not just companies, consumers and the environment that are suffering from the dependence on imports of fossil fuels and other non-renewable resources. Due to high net imports, some member states have accumulated external debt. As a consequence, those countries show an unsustainable trade deficit. Europe is lacking in natural resources, and therefore is strongly dependent on global imports. This increasing dependence on imports of fossil fuels and non-renewable resources raises serious concerns – especially in the view of a growing demand in emerging countries like China, India and Brazil, which will additionally amplify the ongoing trend of rising prices.

Analysing the macroeconomic developments of some key EU countries (not only crisis countries but also more robust economies such as Germany and France, and Central and Eastern European Countries), this report demonstrates that not one of the European states is exempt from the dependence on imports of fossil fuels. Sven Giegold even argues that the recent decrease of the current account surplus of Germany might be explained by increased costs for the import of resources, not by an adjustment of its economy.

The Green New Deal could make the majority of expensive imports obsolete, argues Sven Giegold, which in turn would reduce macroeconomic imbalances. As a result, less foreign debt would be accumulated and the Euro could be stabilized.

 

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