Germans savour success as euro storm brews

By Reuters Time of article published Jul 1, 2012

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For his fellow Germans, explains businessman Roland Frobel, the euro crisis is a hurricane that may have been spotted on the horizon but has yet to blow in.

“The storm is coming, everybody knows that, but the lightning has not struck yet,” said the chief financial officer of Rossmann, one of Germany’s largest health and beauty retail chains.

From where he is standing, it is hard to imagine sunnier economic weather. His firm has recently created nearly 3 000 new jobs at home and abroad – where it has been expanding in non-euro zone countries such as Poland and Turkey – and expects sales to rise this year.

“The feeling of looming crisis that people have is still vague, undefined,” said Frobel. “And you see this in their continued willingness to go out and buy.”

Hanover, a bustling industrial and trading hub in northern Germany, is a world away from the recession engulfing Greece, Spain and other parts of Europe. Life, for Germans, is as it should be. Unemployment is at 20-year lows and exports are at record levels.

German consumer morale actually rose, a key survey by GfK market research group showed last week, on hopes of higher wages, though it also revealed greater pessimism about the economic outlook due to the euro crisis. People are well aware that everything could suddenly change for the worse if the crisis affecting their neighbours finally blows in.

“In Germany there is no crisis. But that could change very fast,” pensioner Paul Majer said as he strolled through Hanover’s old town.

Culture clash

Like many Germans, he blames those in southern countries for putting Germany’s hard-won prosperity at risk by failing to enact the sort of austerity measures Germany endured when the euro arrived and wages were held down to keep it competitive.

“I don’t believe things will stay okay for much longer. The euro zone is too diverse. They say we Germans live to work while the Mediterranean cultures work to live,” Majer said.

Chancellor Angela Merkel was under unprecedented pressure at an EU summit last week to pledge more of German taxpayers’ cash to rescue the euro. Her countrymen are having none of it.

“Greece should not get any more money, it is a bottomless pit. The strong countries cannot prop up the weak ones forever. Germany is just not strong enough to do that,” taxi driver Kurt Ringling said.

A city of 500 000 people, Hanover is a good place to take the pulse of “middle Germany” because of its central location and a diverse economy.

“Unemployment here fell again last month. The unions have secured wage increases. Many firms are doing relatively well,” said mayor Stephan Weil.

“But many people look with anxiety at Europe, especially those countries in big financial difficulty like Greece and Spain. Many people in Hanover know the countries from having spent holidays there or have friends and acquaintances here who have come here from those countries,” he said.

Sense of alarm

The storm clouds of the crisis are slowly arriving. Local newspapers have reported the introduction of short-time working at factories belonging to leading automotive suppliers Continental and Johnson Controls in the Hanover area because of crumbling demand in key European markets.

Psychologist Manon Rossmanik said she did not feel the euro crisis in her own life but said there were growing signs of people preparing for the worst.

“Real estate prices are going up. People want to protect their savings by buying property, tangible things,” she said.

That sense of alarm prods Germans to stand by Merkel and her firm insistence that other euro zone countries accept their austerity “medicine” before receiving aid.

“Germans’ patience is wearing thin – in fact, there’s none left. We sometimes have the impression Europe can only exist by being on the German payroll,” said Wolfgang Nowak, the head of the Alfred Herrhausen Society, a think-tank run by Deutsche Bank.

“The German national mood is very anti-bailout… We want Merkel to be a good Swabian housewife,” he said, invoking a German image of penny-pinching prudence.

At the site of the annual Hanover trade fair the mood remains upbeat.

The euro zone stayed largely in the background when the fair was held in April, said Wolfram von Fritsch, the chairman of the board of Deutsche Messe which runs the trade fairs.

“The euro crisis is seen as a kind of natural disaster. Like rain or snow, it is something we can’t change, so let’s just focus on our main business.” – Gareth Jones from Reuters

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