We desperately need a slimmer and fitter Germany

Share

One of the perennial stories of recent years has been that of Germany on the brink. According to this analysis - full of breast-beating woe in Germany and infused with a strong dose of
Schadenfreude in the UK - the German economy is so mired in old practices that it is doomed to an eternal downward spiral.

One of the perennial stories of recent years has been that of Germany on the brink. According to this analysis - full of breast-beating woe in Germany and infused with a strong dose of Schadenfreude in the UK - the German economy is so mired in old practices that it is doomed to an eternal downward spiral.

Certainly, Germany has been reluctant to introduce radical change that other European countries have embraced. In Britain, Margaret Thatcher's administering of the medicine was especially harsh; but almost every European country has introduced painful reforms in recent decades in an attempt to streamline the economy.

For too long, Germany seemed to believe that it could live in a world of its own, in which the economic sun would never set. Chancellor Helmut Kohl tried to introduce reforms that would improve Standort Deutschland - Germany as an investment site. His attempts came to nothing, not least because of the German consensus-based system, which is in many respects admirable, but which also means that change is difficult to achieve.

Mr Kohl's successor, Gerhard Schröder, has introduced one of the most crucial modernising changes that the country has seen. His tax bill, which has finally been agreed, gets rid of capital-gains tax on the sale of large shareholdings, thus making it possible to envisage the break-up of some of the all-German monoliths. Mr Schröder declared it to be "a great day for Germany and a good day for the image of Germany in the world".

Certainly, it is remarkable that Germany is introducing such substantial change to a system that has been famous for many years for its high taxes and complete inflexibility. It is an obvious paradox that it has taken a Social Democratic government to force the changes through, while the theoretically business-friendly Christian Democrats, now led by the east German Angela Merkel, grumbled among themselves. The markets soared on the news.

The changes have only just begun. A business climate index published yesterday, showing a fall in confidence, predated the tax-cutting package; the trend next month is likely to go the other way. But Germany's toughest calls - including pensions and the luxurious welfare provisions - still lie ahead. Some complacent Germans believe that change is not necessary; other Europeans argue that the German monster is incapable of change. But change is both necessary and possible. A slimmer, fitter Germany can benefit all of Europe.

React Now

Latest stories from i100
iJobs Job Widget
iJobs General

Recruitment Genius: Audit Assistant

Negotiable: Recruitment Genius: Graduate Opportunities are available at a lead...

Tradewind Recruitment: Experienced Cover Supervisor

£12000 - £14400 per annum: Tradewind Recruitment: Experienced Cover Supervisor...

Recruitment Genius: Trainee Account Manager

£14000 - £16000 per annum: Recruitment Genius: This company are proud to be on...

Ashdown Group: Application Support Engineer with SQL skills

£28000 per annum: Ashdown Group: A highly reputable business is looking to rec...

Day In a Page

Read Next
Conservative MP Louise Mensch has made enemies in high places through her fearless pursuit of the hacking scandal  

Thank heavens for Louise Mensch and her foul-mouthed tweets to world leaders

Grace Dent
Focus E15 Mothers led a protest to highlight the lack of affordable housing in London  

When rents are so high that you have to share a bed with a stranger, surely the revolution can’t be far off

Grace Dent
Syria crisis: Celebrities call on David Cameron to take more refugees as one young mother tells of torture by Assad regime

Celebrities call on David Cameron to take more Syrian refugees

One young mother tells of torture by Assad regime
The enemy within: People who hear voices in their heads are being encouraged to talk back – with promising results

The enemy within

People who hear voices in their heads are being encouraged to talk back
'In Auschwitz you got used to anything'

'In Auschwitz you got used to anything'

Survivors of the Nazi concentration camp remember its horror, 70 years on
Autumn/winter menswear 2015: The uniforms that make up modern life come to the fore

Autumn/winter menswear 2015

The uniforms that make up modern life come to the fore
'I'm gay, and plan to fight military homophobia'

'I'm gay, and plan to fight military homophobia'

Army general planning to come out
Iraq invasion 2003: The bloody warnings six wise men gave to Tony Blair as he prepared to launch poorly planned campaign

What the six wise men told Tony Blair

Months before the invasion of Iraq in 2003, experts sought to warn the PM about his plans. Here, four of them recall that day
25 years of The Independent on Sunday: The stories, the writers and the changes over the last quarter of a century

25 years of The Independent on Sunday

The stories, the writers and the changes over the last quarter of a century
Homeless Veterans appeal: 'Really caring is a dangerous emotion in this kind of work'

Homeless Veterans appeal

As head of The Soldiers' Charity, Martin Rutledge has to temper compassion with realism. He tells Chris Green how his Army career prepared him
Wu-Tang Clan and The Sexual Objects offer fans a chance to own the only copies of their latest albums

Smash hit go under the hammer

It's nice to pick up a new record once in a while, but the purchasers of two latest releases can go a step further - by buying the only copy
Geeks who rocked the world: Documentary looks back at origins of the computer-games industry

The geeks who rocked the world

A new documentary looks back at origins of the computer-games industry
Belle & Sebastian interview: Stuart Murdoch reveals how the band is taking a new direction

Belle & Sebastian is taking a new direction

Twenty years ago, Belle & Sebastian was a fey indie band from Glasgow. It still is – except today, as prime mover Stuart Murdoch admits, it has a global cult following, from Hollywood to South Korea
America: Land of the free, home of the political dynasty

America: Land of the free, home of the political dynasty

These days in the US things are pretty much stuck where they are, both in politics and society at large, says Rupert Cornwell
A graphic history of US civil rights – in comic book form

A graphic history of US civil rights – in comic book form

A veteran of the Fifties campaigns is inspiring a new generation of activists
Winston Churchill: the enigma of a British hero

Winston Churchill: the enigma of a British hero

A C Benson called him 'a horrid little fellow', George Orwell would have shot him, but what a giant he seems now, says DJ Taylor
Growing mussels: Precious freshwater shellfish are thriving in a unique green project

Growing mussels

Precious freshwater shellfish are thriving in a unique green project