Editor’s blog: No cause for schadenfreude

So, the Germans have drifted into recession: the Federal Statistics office says that German GDP contracted 0.5% in the third quarter, after a 0.4% fall in the second. But before we all get overwhelmed with a sense of schadenfreude, it might be sensible to remember a few vital statistics:

1)The German trade balance for the last twelve months was $280bn in the black – we were $190bn in the red.
2)The Germans are running a current account balance of plus $270bn for the last year, whereas the UK in the second quarter was $83bn in the red – and this figure is going to get a lot worse.
3)If you had to place a bet on a country that will weather the storm, it might well be Germany. If you make BMWs and Mercedes Benz rather than Fiestas or Puntos, then you can afford to sell them for a bit less and still make a decent margin.

More broadly, you could argue that the Germans have had very little truck with what you might call ‘gangster capitalism’. And last week at Porsche they had some sweet revenge on those gangster locusts, when they pulled a fast one on VW-shorting hedge funds.

Nevertheless, contracting they are. But there are two things that have yet to be hit by the German downturn: saving and drinking beer. The Germans are still refusing to shun the stein of foaming lager, and despite the fact that prices have gone up by nearly 8%, due to increased raw material costs, they are still quaffing an annual average of 112 litres per head – the same level as 2007. (In the UK, sales of beer are nose-diving as we all take refuge in Lidl own-brand super-strength cider.)

The other thing is saving – something we’ve almost entirely forgotten how to do in the UK. Show me a British child who still knows what a piggy bank is – if you give a child a tenner these days, they normally respond with: ‘Can I use your credit card? There’s something I really need to buy online. Now.’ Anyway, the Germans’ savings ratio has actually gone up to an amazing 11.3% of disposable income in the first half of this year. They know the value of saving for a rainy day or a new BMW.

Mind you, if our interest rates fall to less than 1%, it’s hard to see the attraction of saving anything. Might as well fiddle – and spend – while Rome burns.

In today’s bulletin:
BT pulls plug on 10,000 jobs
Bank backtracks as economic clouds gather
Editor’s blog: No cause for schadenfreude
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MT’s Little Ray of Sunshine: Inside the mind of an entrepreneur