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Deutschland Uber (und fur) Alles

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The divergence between the European 'haves' and 'have nots' was pretty evident on Wednesday, following the publication of the latest growth figures from Europe. While Germany has rollocked along with growth of 0.5% in the first quarter, Greece slipped by 6.2%, while Italy declined by 0.8%. All stirred together it means that the rurozone did not grow at all during the first three months of the year.

This means two things: Firstly, when the fact that an economy shrank by over 6% in one quarter isn't headline news then the world really is in trouble. Secondly, the eurozone is performing better, as a whole, than the UK.

Germany is an exceptional case of course, and if we look beyond the country's significantly short term growth figure, the reasons why are fairly obvious. It is a country of highly-skilled and efficient manufacturers that have built up a fabulous reputation for providing the finest standards of engineered goods. Naturally, these exported goods are made more and more attractive the weaker the euro gets and the cheaper they become. Germans may grumble about being part of a monetary union with the bankrupt Greeks and the rest of the periphery, but you could argue (and you'd be right) that the biggest beneficiary of the single currency is in fact Germany.

Back of a cigarette packet estimates would suggest that should Germany leave the euro and retake up the Deutschemark (I'm not saying that they will, conspiracy-theorists!), then the value of that new currency would be somewhere between 10-15% more than that of the euro. Instant price increase leads to an instant fall in demand. The subsequent lack of competitiveness leads to job losses as factories lay off employees, and the growth machine slows.

These exports are also destined for more worthwhile places than most. Between a quarter and a third of Germany's exports are defined as 'extra-EU' - i.e. going to countries outside the EU which, may be having a tough time themselves, but are nowhere near as hamstrung as some members of the EU. Most are helped too by the high oil price at the moment; oil barons like Porsches and Lamborghinis (owned by Audi) not Peugeots and Saabs.

We mustn't mistake this economic strength for invincibility; however, as it is likely that company investment during this period may simply have been the rebuilding of inventories. Should the 'ripple-effect' of a Greek bailout trigger waves on the South China Sea, and not just the Mediterranean, then the shift in global demand will impact on all and sundry.

Unfortunately we have now got to a point where everybody needs to stop acting as they have for years and start acting like each other. German sensibleness must give way to extravagance; Spanish manana must switch to ahora and Italian unpredictability must morph into political security. When put that way it's easy to become overly pessimistic. I'm sure the Germans make something for that as well.

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