For a decade already, the large German bear hibernait. Finally, not really, because bears do not hibernate. When comes the bise, the largest animal of Europe reduced his activity while now vital for the preparation of the future functions (the cubs born in January). For a decade, the German bear was moving its economy of just 1.4 year, then the French Rooster was going at a rate of 2.3. Last year, its production is increased 0.9. But the heyday back German. The best barometer, calculated by the Munich IFO Institute, the business climate is the highest since fifteen years. The bear, which is the emblem of the city of Berlin, splutter. And animals lovers will tell you, a bear in full form can go quickly, with enough energy to take a series of other livestock to the Continent. The problem is that he is going to take a bad stick kick next year. Will it be enough launched to not feel the shock
The revival of the Germany is not recent. Our powerful neighbour became the world's leading exporter of goods in 2003. Last year, he sold the rest of the world for EUR 786 billion, more than double of French exports. This power might appear normal. The Germany specializes in machines that equip the plants, and Asia is booming of equipment. In reality, the strength of the bear is impressive. In recent years, he has gained market share in all industrial sectors where it is this with the exception of the metallurgy and chemistry, that he voluntarily dropped (now Preussag Hoechst and tourism became a subsidiary of Sanofi-Aventis). Novelty, therefore, is not in the drive to export in the revival of domestic demand.
Since the beginning of the Decade, the German companies led a simple strategy to tighten bolts following the shocks of the 1990s (drift of costs in the intoxication of reunification, entry of the deutsche Mark in the euro at a level too high, excessive indebtedness during the Internet bubble). The number of jobs fell more than a million in three years. The purchasing power of the mass of wage declines over the past five years. No wonder that the consumer is in berne. But these colossal efforts to conquer new opportunities in the international. As noted Sylvain Broyer, an economist at Ixis CIB, the contrast between the weakness of consumption and the export surge "is therefore ultimately the two sides of the same coin". Now, companies have completed cleaning up their balance sheets. So, they can invest without remorse. And the more their order books explode ( 11 in one year).
Little by little, the restart extends. Since the end of 2005, it affects the building, affected since the boom of reunification early 1990s (the activity is decreased by 25 in a decade!). There is a tremendous potential to exploit. Only 42 of Germans have their housing, against 57 of the French and more than 70 of the British. Encrusted in little offensive habits on real estate loans, bankers may be jostled by the emergence of foreign technology. The second Bank of the country, HVB has placed under the control of the Italian UniCredit.
The big question now is on consumption. Here also, there is reason to hope. First, the Germans have more money. The country stops to destroy jobs. Salary prospects are less depressing. Then, they have good reasons to spend in 2006. There is of course the World Cup, which will take place in June-July. It will benefit hoteliers, restaurateurs, and sellers of televisions. There is also the deletion in 2007 of the "Eigenheimzulage", tax relief granted to purchasers of their first home. Finally, and especially the increase of VAT by the Merkel Government for 2007. Its rate is expected to increase from 16 to 19. On a car of 20,000 euros, this is a mechanical increase of 600 euros enough to encourage consumers to anticipate their purchases. The Germans can tap into their economies. During the past three years, where their earnings have decreased, their savings increased while it fell significantly in France. Morgan Stanley experts assess EUR 50 billion the amount that could be quickly mobilized.
In 2006, the German bear is indeed out of its lethargy. Its production could grow by 2... perhaps faster than that of the Gallic rooster. But what happens in 2007, when Berlin will raise the tax on consumption and income In the Japan, ten years earlier, the recovery of VAT in an economy that seemed out of torpor had broken growth. But Merkel team game seems more subtle. Firstly, the increase is announced long in advance. If the activity and therefore tax revenues are going better than expected, it will be time to trim the VAT increase. Secondly, the increase in VAT is accompanied by a decrease in social security contributions. It is therefore the same effect as a devaluation, become impossible since the deutsche mark has been melted in the euro: the products become more expensive on the market inside and less expensive to export. In other words, the German bear will further strengthen its supremacy over global markets.
The bet is risky. Today, it seems that it can be won: German growth is expected to resist tax increases planned next year. But if external shock (new oil boom, bond crash, crisis in emerging markets...) had to slow down the bear in its acceleration in 2006, the VAT stick kick in 2007 could estourbir it seriously. In the meantime, the Germany seems to have defeated the demons that the tenaillaient for over a decade.