Britain motors into Europe

We've 'woken up' and now we're on track to become Germany's number one trade partner

They are conspicuous symbols of international trade, the 12 London cabs plying the streets of Germany's financial capital.

"The Germans love it," says Walter Barth, who owns two of the taxis and says they're usually booked days in advance. "Some customers sit in the back and feel they've got to wave to the public like the Queen."

Barth's British cabs, painted the off-white that German regulations demand, are a tiny part of the increasing trade between Germany and the UK that is still flourishing despite the strong pound. Britain exported goods and services worth DM4.964bn (pounds 1.7bn) to Germany in July 1997, for example - a substantial 38 per cent more than in November 1995, when imports were DM3.588bn.

"Britain has definitely woken up," says Oscar-Erich Kuntze, economist at Ifo Institute in Munich. "For decades, they had a stop-and-go economy. When the pound was high, exports slumped, companies cut investments, laid off people, the economy turned into a recession, imports started to decline and eventually, the pound fell. Then the reverse process started."

The recent strength of the pound should have started to cut into export growth. It has risen from DM2.217 to the pound in November 1995 to peak at DM3.017 last July. Currently it is hovering just below DM3. UK products have become 36 per cent more expensive for German customers.

"Usually, if a currency gains one per cent in value against another currency, exports from that country decrease 0.5 to 0.9 per cent, with a typical delay of about half a year," said Carsten Meier, a University of Cologne economist who specialises in trade relationships.

This rule of thumb seems to have gone by the board this year. "The pound is up but our exports haven't decreased," said David Kern, chief economist of NatWest, "but it's too early to say that this situation is sustainable."

Carbodies Ltd in Coventry thinks there will be good news. Since the 1950s it has built London cabs, like the ones Walter Barth operates in Frankfurt.

Barth is enthusiastically anticipating trade will increase. He is Carbodies' sales manager for the Rhine-Main region. "Next year," he estimates, "there'll be 50 in Frankfurt and there is a market for 2,000 in Germany."

Looking at German exports to Britain, the picture is not what you would expect either. Overall, Germany sold products and services worth DM7.054bn to Britain in July 1997, 42 per cent more than in November 1995, when sales were DM4.962 bn.

This is because Britain is becoming relatively more important than France as a German export market. It is also because German companies are using Britain as a low-cost export platform for the rest of the world.

Siemens, Germany's biggest employer and third-largest seller of capital goods, confirms the trend. "Britain is increasingly important for us," said spokesman Thomas Weber. "Just looking at the last 15 months, we've announced plans to build a chip-plant in Newcastle, we've bought parts of Parsons, sold our defence industry to British Aerospace - and we're in talks with BNFL about co-operation in nuclear power. In France, we've done nothing."

Juergen Gehrels is chief executive of Siemens Plc, the UK subsidiary of the German heavy machinery and electronic products maker. His pride is pulled two ways as he discusses Britain and trade: "Britain has significantly gained competitiveness," he said in an interview. "It is a highly innovative and flexible environment. More so than Germany, which is living on borrowed time."

Siemens' exports from Britain to the world, totalling pounds 1.3bn last year, have been rising steadily despite the strong pound and half go to Germany.

"We and Britain as a whole are constantly working to increase productivity and to introduce new products faster on the market than anyone else," says Gehrels. "That's why Britain is such a lively and dynamic environment."

German exports to Britain totalled DM61.671bn in 1996 and Britain's share of German exports rose from 8.0 to 9.0 per cent. "That's quite a rare phenomenon," said Meier, "as export ratios usually remain very stable."

France still accounts for 11 per cent of Germany's exports but "their share is shrinking", according to Meier. He added: "And the trend will continue, as the strength of Britain's economy will only be fully reflected some months from now."

Kolbenschmidt, German maker of car machinery parts, expects an even longer delay. "The contracts we signed now will lead to sales in two or three years," board member Joerg-Martin Friedrich said. "But our sales are up already. We will export goods worth DM94m this year, 13 per cent more than 1995," he said.

"It certainly looks as if Britain is gaining ground as a trade partner for Germany," said Michael Heise, chief economist at DG Bank in Frankfurt. "And one of the reasons could be the increasing interlocking of the two economies."

According to the British Chamber of Commerce, there are around 800 British companies present in Germany. And the German Chamber of Commerce in London says there are more than 1,500 German companies operating in Britain.

One of them is Hugo Boss, the fashion company, which has significantly expanded its business in Britain. "Our sales are up 49 per cent in Britain this year," said spokeswoman Monika Steilen.

"With a continuation of Britain's economic strength, a bit of luck and some more strikes in France, new Britain might become Germany's most important trade partner," says Carsten Meier. "It is certainly on track to do so."

Copyright: IOS & Bloomberg

Start your day with The Independent, sign up for daily news emails
There will be a chance to bid for a rare example of the SAS Diary, collated by a former member of the regiment in the aftermath of World War II but only published – in a limited run of just 5,000 – in 2011
charity appealTime is running out to secure your favourite lot as our auction closes at 2pm today
Arts and Entertainment
Bianca Miller and Katie Bulmer-Cooke are scrutinised by Lord Sugar's aide Nick Hewer on The Apprentice final
tvBut Bianca Miller has taken on board his comments over pricing
Life and Style
Approaching sale shopping in a smart way means that you’ll get the most out of your money
life + styleSales shopping tips and tricks from the experts
Elton John and David Furnish exchange marriage vows
peopleSinger posts pictures of nuptials throughout the day
in picturesWounded and mangy husky puppy rescued from dump
David Silva, Andy Carroll, Arsene Wenger and Radamel Falcao
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

SThree: Trainee Recruitment Consultant - LONDON

£20000 - £25000 per annum + OTE £40,000 + Car + Pension: SThree: SThree are a ...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £35K: SThree: We consistently strive to be the...

SThree: Graduate Recruitment Consultant

£20000 - £25000 per annum + OTE £35000: SThree: SThree are a global FTSE 250 b...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £35K - £45K: SThree: SThree Group have been we...

Day In a Page

Surrounded by high-rise flats is a little house filled with Lebanon’s history - clocks, rifles, frogmen’s uniforms and colonial helmets

Clocks, rifles, swords, frogmen’s uniforms

Surrounded by high-rise flats is a little house filled with Lebanon’s history
Return to Gaza: Four months on, the wounds left by Israel's bombardment have not yet healed

Four months after the bombardment, Gaza’s wounds are yet to heal

Kim Sengupta is reunited with a man whose plight mirrors the suffering of the Palestinian people
Gastric surgery: Is it really the answer to the UK's obesity epidemic?

Is gastric surgery really the answer to the UK's obesity epidemic?

Critics argue that it’s crazy to operate on healthy people just to stop them eating
Homeless Veterans appeal: Christmas charity auction Part 2 - now LIVE

Homeless Veterans appeal: Christmas charity auction

Bid on original art, or trips of a lifetime to Africa or the 'Corrie' set, and help Homeless Veterans
Pantomime rings the changes to welcome autistic theatre-goers

Autism-friendly theatre

Pantomime leads the pack in quest to welcome all
The week Hollywood got scared and had to grow up a bit

The week Hollywood got scared and had to grow up a bit

Sony suffered a chorus of disapproval after it withdrew 'The Interview', but it's not too late for it to take a stand, says Joan Smith
From Widow Twankey to Mother Goose, how do the men who play panto dames get themselves ready for the performance of a lifetime?

Panto dames: before and after

From Widow Twankey to Mother Goose, how do the men who play panto dames get themselves ready for the performance of a lifetime?
Thirties murder mystery novel is surprise runaway Christmas hit

Thirties murder mystery novel is surprise runaway Christmas hit

Booksellers say readers are turning away from dark modern thrillers and back to the golden age of crime writing
Anne-Marie Huby: 'Charities deserve the best,' says founder of JustGiving

Anne-Marie Huby: 'Charities deserve the best'

Ten million of us have used the JustGiving website to donate to good causes. Its co-founder says that being dynamic is as important as being kind
The botanist who hunts for giant trees at Kew Gardens

The man who hunts giants

A Kew Gardens botanist has found 25 new large tree species - and he's sure there are more out there
The 12 ways of Christmas: Spare a thought for those who will be working to keep others safe during the festive season

The 12 ways of Christmas

We speak to a dozen people who will be working to keep others safe, happy and healthy over the holidays
Birdwatching men have a lot in common with their feathered friends, new study shows

The male exhibits strange behaviour

A new study shows that birdwatching men have a lot in common with their feathered friends...
Diaries of Evelyn Waugh, Virginia Woolf and Noël Coward reveal how they coped with the December blues

Famous diaries: Christmas week in history

Noël Coward parties into the night, Alan Clark bemoans the cost of servants, Evelyn Waugh ponders his drinking…
From noble to narky, the fall of the open letter

From noble to narky, the fall of the open letter

The great tradition of St Paul and Zola reached its nadir with a hungry worker's rant to Russell Brand, says DJ Taylor
A Christmas ghost story by Alison Moore: A prodigal daughter has a breakthrough

A Christmas ghost story by Alison Moore

The story was published earlier this month in 'Poor Souls' Light: Seven Curious Tales'