Germany has sparred with its European partners over how to respond to the financial crisis, argued with the United States over the benefits of stimulus versus austerity, and defiantly pursued its own vision of how to keep its economy strong.
Statistics released Friday will buttress the German view that they had the formula right all along. The government on Friday announced economic growth of 2.2 percent compared with the previous quarter, the German economy’s best performance since reunification 20 years ago and an annual rate of close to 9 percent.
The strong growth figures will surely strengthen the conviction here that German workers and companies in recent years made the short-term sacrifices necessary for long-term success that its European partners did not. And it will reinforce the widespread conviction among policy makers that they handled the financial crisis and the painful recession that followed it far better than the United States, which, they never hesitate to remind, brought the world into this crisis.
A vast expansion of a program paying to keep workers employed, rather than dealing with them once they lost their jobs, was the most direct step taken in the heat of the crisis. But the roots of Germany’s export-driven success reach back to the painful restructuring under the previous government of Chancellor Gerhard Schröder.
By paring back unemployment benefits, easing rules for hiring and firing, and working together, management and labor, to keep a lid on wages, Germany ensured that it could again export its way to growth with competitive, nimble firms producing the cars and machine tools the world’s economies — emerging and developed alike — demanded.
Germans steered clear of the debt-fueled consumption boom that many believe contributed to the financial crisis. During the recession, Chancellor Angela Merkel resisted the palliative of government spending that the United States and some European partners felt was crucial to restoring growth.
The battle over how to navigate the financial crisis helps display Germany’s emerging post-cold-war identity, as a country less tolerant of foreign demands and lecturing, one with a tenser relationship with European partners. Though Germany has plenty of problems to grapple with at home, it has also become less obsessed with its historical crimes and more enthusiastic about its economic model, its culture and its improved standing in the world.
Jenny Wiblishauser, 33, a single mother in the southern town of Memmingen, said Germany’s financial prudence — and its willingness to ignore foreign criticism — made her proud. “Before, the Greeks would call us Nazis and we would act vulnerable,” she said. “Now one says, ‘Well, I’m not driving there for vacation.’ ”
Some critics in Europe say that confidence veered toward hubris in the contentious debate this year over shoring up the Greek government and restoring confidence in the troubled euro. In particular, the venomous contempt in the German news media directed at Greece raised significant concerns among allies that a more assertive Germany had emerged, said Thomas Klau, an expert on European integration at the European Council on Foreign Relations.
“That was like a wake-up call to the rest of Europe that something had changed in Germany,” Mr. Klau said.
In the process, the relationship between France and Germany, the key for decades to European integration, has become fraught and mistrustful, calling into question the future of the project of European integration.
As the latest number show, Germany is outproducing its neighbors by wider and wider margins, raising fear of a two-speed Europe that could render the common regional currency unstable.
France’s economy grew at just a small fraction of Germany’s, 0.6 percent in the same quarter. Spain’s economy grew an anemic 0.2 percent, while Greece’s shrank 1.5 percent.
If policy makers in Berlin are right and the turning point has been reached, they will look wise. If the fragile recovery cracks, as worrisome signs of a slowdown in the United States and a cooling down of Chinese growth may augur, they could still bear the brunt of the blame for doing too little to foster regional and global growth.
Government officials here are confident they found the right approach, including a better solution to unemployment. They extended the “Kurzarbeit” or “short-work” program to discourage companies from firing employees. The government makes up for lost wages out of a fund filled in good times through payroll deductions and company contributions.
By NICHOLAS KULISH
Tags: businesses, economic growth, economic recovery, financial, financial crisis, financial system, unemployment, us economy
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