Germany's lesson in preparing solid foundations

Jun 9 2008 By Anna Blackaby, Business Staff

Fans of German stand-up comedians - and I count myself among that select group - will know of Henning Wehn, the self-styled ‘German Comedy Ambassador’.

Henning’s mission is to challenge outdated British preconceptions about our much stereotyped European neighbour - while gently sending up the most striking differences between the German and British attitude to life.

One part of Henning’s show graphically demonstrates how our two countries diverge in attitudes towards debt and spending.

“Never spend more than you earn,” was the advice given by Henning’s Mutti and Vati as he was sent out into the big wide world - a seemingly archaic attitude in the UK’s climate of zero per cent credit card interest and balance transfer juggling.

Or at least that was the case until the credit crunch arrived on our shores.

While UK consumers and businesses were frolicking merrily on borrowed money, those dull Germans were staying in doing their homework.

Consumers saved and businesses slowly, methodically and in an orderly German manner, built up efficient and cash-rich companies that, surprising to say, actually made things.

Things you can touch - cars, solar panels, ball bearings, reciprocating pumps - things you can sell to growing economies like China, India and Russia.

Admittedly, reciprocating pumps are not very glamorous, but at least importers of German products the world over can understand them, unlike much of the financial wizardry that has propelled the UK’s economy recently, which not even the Bank of England, it seems, actually understood that well.

Sure, a few German banks were caught up in the credit crunch crossfire - the IKB bail out provided Germany’s equivalent of Northern Rock.
But generally, German banks steered clear of nebulous financial products and German growth plodded steadily along, fuelled by the Mittelstand - the army of largely privately-owned SMEs that form the backbone of German manufacturing.

Traditionally, cars have provided Germany’s most visible symbol of export dominance abroad.

But with oil recently hitting $139, the country’s nascent green technology sector provides Germany with a handy hedge against rising fossil fuel prices, and one which may even steal its automotive crown.

A far-sighted renewable energy law has jump-started a whole new cleantech industry and Germany has embraced climate change as an economic opportunity.

Burkhard Schwenker, chief executive of Roland Berger Strategy Consultants, predicts green technology will generate a turnover of a trillion euros by 2030.

“In 2020 – so, just a few years from now – the environmental technologies and products industries will employ more people than mechanical engineering or the automotive industry,” he said.

Today, one million Germans work in environmental technologies, many of them in the ex-GDR which has emerged from a grey post-communist fog to claim the unlikely title of Europe’s solar energy powerhouse.

Of course Germany is not immune from the woes of the world’s economy.

Few are expecting the soaring growth figures seen in Q1 2008 - Germany’s strongest performance for 12 years - to continue.

But there’s no doubt that while the UK heads towards a stormy period, the outlook for Germany is much sunnier.