Germany and the UK – the BBC’s economic comparison

             I missed the BBC propaganda movie arguing it’s better in Germany. Apparently the German emphasis on more rented housing and industry makes for a richer and more successful economy and society. Let us examine that proposition.

                If we look at the income per head figures the comparisons are interesting. In Europe the two richest countries are non EU members, Norway and Switzerland.  They are more than $5000 a head richer than Germany. Norway manages it thanks to great natural resources, fish and oil, that stay outside the clutches of the EU. Switzerland manages it thanks to excellence in selected industries like watches and chocolate, complemented by banking and financial services.

                  All the surveys also show that the USA is richer per head than Germany or the UK, by around one quarter or $10,000 a head. If the BBC is keen to see how we can live more prosperously, it might make the odd film that was complimentary about the USA.

                     The Penn (Pennslyvania University) World survey shows the UK just ahead of Germany in income per head by $300. The IMF shows the UK a little below, by around $2000. All the main surveys agree that the UK and Germany are usefully ahead of Italy and Spain, and most put the UK ahead of France and Japan. There is nothing in the figures to suggest Germany is way ahead, or that Germany is anywhere near catching the USA, Singapore, Norway, Switzerland  and the other world leaders. Germany is also usually ranked below Sweden and Denmark ,  non  Euro members of the EU. On the numbers there is not a great deal to explain about alleged superior German performance.

            I cannot see how having more rented housing is a magic ingredient that helps Germany. The UK has experienced a rising private rented sector in recent years, but these have been poor years for overall growth of the economy. Most people still have a strong preference for ownership, and there is nothing wrong with an economy that seeks to satisfy that natural wish for as many as possible.

          It is true that Germany has a strong and successful engineering sector, larger than the UK’s in many segments. Where the UK is strong in aerospace engineering and defence related, Germany is larger and stronger in cars, heavy plant and machinery. Where Germany is strong in basic chemcials, the UK is strong in pharmaceuticals. The UK relies on a bigger and more successful service sector, especially in business, legal and financial services.

           As someone who has in the past  run companies with engineering plants in the UK, the US, Germany and elsewhere I would urge people to beware of facile generalisations. I have seen poorly led German factories where Anglo Saxon managers can teach them things, and I have seen brilliant German factories with state of the art equipment. There is a bigger spread in quality and achievement within both Germany and within  the UK when it comes to factories, than between the German average and the UK average. USA  productivity is on average higher. The BBC should go and find out why, by talking to some US workers.