|Germany's Troubles Bubble Up|
|Key Words||Currency Union, Exchange Rates, Economic Growth|
Economic data point to a myriad of problems in the German economy. Economic growth is 0.3 percent and is considerably lower than growth rates in other European Union (EU) countries. Unemployment is about 10 percent, or 4.2 million people, and has increased over the last two years. Germany's budget deficit is 3.7 percent, an amount that exceeds the European Union rules. There is widespread pessimism about the economy and this has resulted in a decrease in retail sales and an increase in bankruptcies. Many analysts believe that reforms are badly needed in order to get Europe's largest economy moving.
When the European Union was formed, Germany was its economic leader and it was thought that German business acumen, technology, business/government relations and leadership would lead the EU to challenge the U.S. in world markets. Now Germany is floundering with no reversal of its economic fortune in sight, and many worry that Germany's problems will cause the rest of the EU to suffer.
Given Germany's situation, one would expect German politicians to be
offering a number of remedial proposals. This has not happened. The average
German worker is to a large extent insulated from economic downturns by
the country's social safety net. Germans have government-provided health
care, nursing care, welfare and education. Although many realize that
reforms are needed, they are wary of proposals that might reduce their
benefits or pensions.
(Updated April 3, 2003)
|Source||Steven Komarow, "German coziness puts nation at risk," USA Today, February 10, 2003.|
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