We need to have a German recovery
May 8 2003 By Peter Jackson, The Journal
The bank holiday weekend saw the family and me in Germany taking advantage of a wonderfully cheap flight to Cologne.
The high spot of the trip came at Cologne airport where we were faced by two grim customs officials, to whom we explained that my son was included on our passports. One official peered at them and demanded of my son: "Vot is your name?" Sadly and childishly I couldn't help myself saying: "Don't tell him Pike." The ensuing conversation revealed that: A, the Germans have a lamentable lack of acquaintance with old Dad's Army episodes, and B, they have no sense of humour.
This is, of course, unfair and untrue. The Germans are a delightful people, as well as being industrious and terrifyingly good at almost everything. The young man at the Europcar desk, who arranged our car hire with brisk efficiency and in word-perfect English, could easily step into the shoes of any chief executive of one of our major plcs. And the signs of prosperity are all around, from the ubiquitous Mercedes to the contented middle-aged Hausfraus tucking into their mid-afternoon cream cakes and coffee in every pavement café.
But appearances deceive and the German economy is ailing. People believe prices have risen since the introduction of the euro and last year real GDP scarcely grew.
The decline in employment has accelerated since the middle of last year, unemployment has recently surged and a recent German industry report has revealed business confidence to be at its lowest for 16 months. And if that's not enough to make your brat wurst, there could be even harder times around the corner. It is hoped there will be a slow economic recovery in Germany around the second half of this year, but the level of the euro, which is approaching a four-year high against the dollar, is not making it easy to sell abroad.
To make matters worse, by its line over Iraq, Germany has alienated consumers in the important US market. Although the main rage is reserved for the French, there's little doubt the US car buyer will be less inclined to buy a Mercedes or a Porsche over the next few months.
Not only that, but according to some reports, the US administration is contemplating punishing Germany further by withdrawing troops and bases from the country. German industry earns billions of euros every year from supporting US forces in the country.
But this should not prompt any feelings of schadenfreude (I picked up some of the lingo) in us. The world economy needs German and European recovery and British industry cannot rely on domestic consumer spending to keep it afloat. If Germany suffers, then so do we.
