30 May 2012, no easy road to increasing competitiveness

The stagnation of zero growth stalks the economy, dreadful public finances, very high unemployment, the universalist welfare state under threat, a radical government trying to make the labour market more mobile and the now-traditional driver of the economy, the consumer, resolutely not spending. The uk in 2012 - and germany in 2005. In that year gerhard shroder's centre-left government gave way to a grand coalition led by angela merkel, but the hard and unpopular work of reform continued almost without missing a beat. The economic pressure made germany's big companies restructure and cut costs, helped by workers and trades unions that ultimately accepted less and less pay, bringing down unit labour costs, helping germany become more and more competitive - making it once again the world's leading exporter (it is still second only to china). Heaped on the pain of paying for unification - some 1.3 trillion euros, or about half germany's annual gdp - this was a decade long squeeze on the population, but it was shouldered largely without complaint, and in the years following germany emerged as, and remains, europe's powerhouse economy, with its industry and exports going from strength to strength, a solid economy, deep social safety net, strong business confidence and, despite the euro's woes, the faith of the markets, giving germany extremely low borrowing costs, although its debt levels are low and sustainable. Was that medium term pain for long term gain ? Some might say.