Germany good to go
After years on the second tier of economic performance, Germany is ready for a return to the big time.
For several years now the UK has been Europe’s dominant economy, while Germany, the largest economy on the continent, has been punching well below its weight. Everyone has been waiting for Germany to sort itself out, and according to the buzz at Euromoney’s recent Germany conference in Berlin, it has.
Although there was the inevitable handful of sceptics, the overriding sense that Germany’s recent strength is sustainable was apparent. One speaker was even of the opinion that indicators understate Germany’s true strength. The competitiveness of German companies has been on the rise for the past few years, as has domestic demand, and unemployment is at its lowest level for a decade. Even with the euro at record high levels, the restoration of confidence in Germany continues unabated.
Much of the good news results from the fruition of Germany’s restructuring and reform efforts that began after reunification in 1990, named by one private equity head as ‘the largest buyout in the world’. In the aftermath, Germany needed access to new sources of capital, and was forced to change the rules to allow easier access to international capital. This resulted in a domino effect of reform that took in the pension and healthcare systems, as well as the tax regime.