Pity the poor Germans. Never mind that two Bundesliga teams are in the Champions League football final this month. Or that the Dax index of German stocks hit an all-time high this week. Or that industrial production – manufacturing output was up 1.4 per cent month on month in March – is on a roll. As a controversial recent survey from the European Central Bank shows, there is a fundamental paradox about the eurozone’s biggest economy – rich Germany, poor Germans. Go figure.
The “rich Germany” bit is easily explained – its economic model, based on manufacturing and exports, is thriving. That is reflected in the stock market. Much of the growth in value of German companies in the past three years comes from those that are not well known, at least outside Germany. Take Kuka, a maker of production machinery. Since the global downturn in 2009 its annual sales have almost doubled to €1.8bn in 2012; so have earnings before interest and tax. Its shares have trounced the wider German market by 200 per cent since 2010. Other standouts are household goods group Henkel, Beiersdorf in consumer goods, Fresenius in healthcare, and the pharmaceuticals maker Merck. While they have been helped by domestic factors – Kuka is a big supplier to domestic carmakers, for example – their basic strength is export markets.
The “poor Germans” clause is more puzzling. The ECB study, which came laden with caveats, was demolished by critics. A low level of private property ownership explains a good chunk of this “wealth gap”. One way of closing it would be for Germans to own more stocks. Data on share ownership across Europe are notoriously difficult to find, but the most recent survey from the Federation of European Stock Exchanges (in 2007) indicates that it was about the same as the UK at 14 per cent – twice the level of France and about half that of Italy. Maybe Germans should stop worrying about the eurozone crisis and start to focus on the party happening in their backyard.