Gosh, being out of the Euro really harmed us!

Top 10 Countries for inward investment
First half of 2004

1. United Kingdom : 313
2. France: 156
3. Hungary: 84
4. Germany : 81
5. Poland: 69
6. Belgium: 69
7. Russia: 67
8. Czech Republic: 63
9. Spain: 62
10. Sweden: 50

Source: Eurostat

Ja, ja ...lies, damn lies and statistics...

Trade Deficits...
=============

Greatest deficit in the EU... UK with 56 Billion Euro
(grew at 7% in H1/04 compareed to H1/03)

Greatest surplus in the EU...Germany with 98.7 billion Euro
(grew at 5% in H1/04 compared to H1/03)

UK deficit is widening...German surplus is growing... trade performance difference
is 154.7 billion Euro.

Comparing non-Euro countries and the Eurozone, trade deficit
is growing in non-euro countries, trade surplus is growing in euro countries.

Interest Rates...
=============

Eurozone interest rate ...2%
UK Interest rate ...4.75%

Comparing UK with Eurozone interest rates, UK has interest rate more
than double that of Eurozone.

Adi,
I hope these figs are known to you because of your job, it would be sad if not.

German unemployment? British unemployment? Sadly I don't research economic figures for a living...

The deficit figures just show that Britain imports more than it exports ie that domestic demand far exceeds domestic supply, so we have to import. But as the economy is performing well, we can afford it. As there is no domestic demand for anything in Germany, there's is bound to be a surplus. As with most Euro countries.

As for interest rates, the fact that base rates in the UK are at 4.75 while they are at 2.00 in Euroland is irrelevant. When have you ever executed business at base rate levels ... never. The spread between 10y German and UK government bonds is at 84bp (3.86 vs 4.70) which reflects the fact that both countries are at different points of the economic cycle.

GDP growth: Germany 1.5% UK 3.6%
CPI: Germany 1.8% UK 1.1%
Unemployment: Germany 10.7% UK 4.7%

3 - 0 to UK I believe.

Britain has had a deficit in visible trade (i.e. actual goods) for many years but it is the invisible trade (banking, insurance, services, etc.) which has kept the country "in the black". With regard to banking, there have been ambitions in Germany to have Frankfurt takeover from London for a long time. If this did happen, it would have fairly dire consequences for the UK economy.

Of the visible trade, much of Britain's exports are not to eurozone countries. This is why joining the euro doesn't make much sense for Britain - the economy benefits from non-euro business. Of course, if trade with the eurozone was more balanced, it might be a different picture.

Hi Everyone,
I not actually living in Germany but I am thinking of moving there and this site is probably better than any guide book there is on how it really is Germany. I have lived in Germany before in the 80's but I was in the Air Force so contact with the locals was limited and I was always brought up with how the Brits beat the Krauts and how all krauts were always bad people. But sometimes I did meet a few who played out the stereotype but surprisingly I found the majority quite friendly and very hospitable.

Since then things have changed allot all I here is that allot of Germans have no job and Britain is the model economy for Europe with hardly anybody unemployed. The German economy we are told is in the doldrums because people will not spend and welfare cuts are now causing riots throughout the depressed East.

But I also hear that the British as a whole are a Trillion pounds in debt with 75% of all EU credit card debt British. With interest rates going up every month the housing crash seems to be on the horizon and maybe recession after that. Unemployment is low in Britain I am told because nobody bothers to claim the £55 a week (if you can get it!) so they just take the first low pay long hour crap job they find. The alternative is to go on income support or incapacity benefit (on the sick) which in the UK stands at 8 MILLION! There's no 80% of your last wage for 3 years here and if the welfare cuts take place can anybody ever see them being as low as Britain's? And for all Germany's problems why is it the world's number one exporter?

I recently watched a BBC news report on the German Economy and the question was why did nobody spend any money on more household items. The Answer was from one German family is that we already have enough, why buy more? And it was basically down to education in that they felt confident enough not to be affected by peer pressure, which is so endemic in British culture. The UK boom of the last few years has been down to high consumer spending with people spending money they have not got. Even the banks are concerned about the high number of suicides of people who cannot meet their repayments. Last night on the news it was reported that the UK economy was now slowing and house prices are falling. Do they think it’s all over –it is now!

If UK households didn't borrow as much as they do (look at house prices, credit card bills, over drafts, personal loans, car loans etc) I think our economy would be in the same mess as that of the Germans.

Your average German household may have less at the moment but compared to us they are relatively debt free and as such a lot more of their income can be classified as disposable.

We've always been encouraged to borrow in the UK - Your parents drum into you the necessity to have mortgage from your teens onwards and this constant drive to borrow is pushing up houseprices to the point where people are borrowing more than they can afford - No thanks - I might pay rent (far less than a mortgage for the same property though) but all my money is my own.

Yes - there is a difference in attitude to debt between UK and Germany. Many UK households rely on their equity in their property rising above their borrowing and thus keeping them "safe". The obvious danger in this is where people borrow beyond their means and can be left in difficulties when interest rates rise and/or property prices drop.

However, the advantage in this has been that people in the Uk and the USA have borrowed, spent and generated economic growth (although not much growth). People in Germany and France have a much more conservative approach and are waiting to be pulled out of recession by their exports. The snag is, with the relative positions of the Euro and the Dollar, they may have some time to wait and then there is all the competition from Eastern Europe.

I am currently anjoying the ce position of having savings instead of debts - but then I don't own anything of consequence :-)

ciao
JG

But when paying rent, you are just paying off someone else's mortgage.

I tell you what,I'll buy a property, and you can rent it from me for thirty years. And then we can both retire. I'll sell the property and go live somewhere warm and play lots of golf. What are you going to do?

Rent another property thanks. With no maintenance costs to pay out for the house (I don't do appartments!) I'll have played a lot more golf over the preceeding thirty years than you!
Given that rents are generally cheaper than mortgage repayments I'll also have had a lot more disposable income in my life to play with and make long term provisions with.

Since an awful lot of Europeans rent there's got to be something in it - We can't all be stupid!

One thing's for certain any houses I do buy are for producing profit short to medium term through renovation - Living in them and just transferring the equity to a bigger and bigger house and then drawing it all when you're too old and knackered to spend it is in my opinion a waste.

You can't live onsite and work on a house properly so what do you do? Buy another house that doesn't need work doing on it? That's a waste as with house prices starting to dwindle you're be lucky to make your money back 6 months down the line.
The only answer is to rent. To put into perspective with cold, hard, figures, I'm not a big fan of new builds for all sorts of reasons but I pay £375 a month for a large 3 bedroom, 2 bathroom house with gardens and parking for 4 cars - That's less than half what a mortgage on the same house would cost and means I have a fair amount of cash each month left for the "golf-fund"

My house in Germany costs me about the same in rent but then that's funded by different work and is cheaper partly as I choose not to live "down-town" in the expensive bits as I have to run a car anyway. This still means I'm paying less in total in rental each month than I would be in mortgage repayments and maintenance costs.

Just read that one through again - Does it sound like I'm bragging? Didn't mean to. Just trying to put the case for rental over 25 years of debt in cold hard cash terms!

Jeez thats cheap! Where I live you would expect to pay at least £1000 per month for that little lot. But being in the 'Outer Metropolitan' (as they call it) area is not cheap sadly.

You would just about get a bed sit or a flat share for £375...you are bloody lucky!

I know Hellie - I did the London thing for 7 years. Ended up despising it - Millions of people just working to pay what they owe.

Trouble is with Peterborough 20 minutes down the road (45 minutes to Kings Cross) the commuter circle around the capital is getting bigger all the time and prices are getting higher even here.

There's still less population density here though so you don't feel so much like a rat in a cage.

Luke,

Germany is now the world's biggest exporter, surpassing even the US in terms of value of goods exported... so something is working in Germany!

The UK produces few consumer goods itself, but loves to consume the result of other countries manufacturing efforts (sucking in imports). The wealth generator in the UK is 'paper money' profits from organised gambling (i.e. London financial markets). London trading houses are only sophisticated 'bookies' taking a cut on all financial bets they administer on behalf of us 'punters' (usually through our pension funds).

Easy to see where you stand on this subject then Adi, eh?

Let's ask Luke...

Luke, aren't the UK (well, any, not just the UK) trading houses simply sophisticated bookies?

Of course they are. You want a bet that interest rates will be above or below a certain level at a certain point in time, I'll make you a price.
But don't forget though we also provide services without which most of the economy wouldn't work - eg re-distributing risk.

Take your fixed rate mortgage for example ... do you think that your bank wants to take the risk of losing thousands if interest rates head north? No, they don't. So he'll come to a "sophisticated bookie" who will take that risk for him. That means he can offer housebuyers a more aggressive price because he doesn't have to factor in a cushion for future interest rate moves.

So you see 'Bloke', the UK cannot make anything worth a mention but we're world-champion bookies. Acting as Europe's biggest betting shop is what keeps the UK's economic head above water.

Not sure why you've aimed your reply at me

You made the claim that traders are bookies and then looked to Luke for confirmation.
Apart from noting you clearly have strong feelings on this subject I've said nothing and certainly haven't either agree or disagreed.

Quite pleased my life isn't ruled by the making of money though if this is where it leads you!

I was replying to your initial comment, above.

Just pointing out that you seemed to have a strong view point on the subject.
Wasn't necessarily disagreeing.

I would say though that although we don't produce many things people want (except world class motorsport engineers and world leading hi-fi equipment(!)), we certainly could produce more given more encouragement from our government.

It's a shame they don't take more of an interest in manufacturing and farming. Then perhaps we'd have more to show for ourselves in the same way that Germany does - Thriving car and electronics industries etc.

I just don't see where our lot are coming from at all - Brown's even cancelled all the tax breaks for film-makers on location in the UK, so now Hollywood and the rest of the world's cinema have descended on Ireland instead.

I don't think that's fair: the British gov is following the path most economists reckon is the correct one - i.e. invest in the knowledge sector especially in getting basic research passed on from universities into business, increase numbers of graduates (already nearly twice as high as in Germany), encourage high tech companies with tax breaks etc. Mass production probably isn't going to be the future for Western Europe given global and EU trade agreements unless we're prepared to undercut the likes of China and India (who have plenty of highly skilled, very productive workers) and of course, as German workers are finding, Eastern Europe - I can't see it happening myself. And agricultural over-production (our current state, which is why we impoverish already poor countries by dumping stuff at less than market rates on the world market ) will be the next to go as the common agricultural policy subsidies, which allow this, are not going to survive the next round of WTO talks...

While this might all be true given the current state of affairs it's cold comfort to those millions of Brits who have farmed and owned farms for hundreds of years or been involved in engineering and manufacturing for generations.

The argument about education is another matter entirely - There's little point in turning out thousands more graduates if it's at the cost of the basics such as written and spoken English or arithmetic.
I financed my girlfriends university education and was appalled (as was she as a German) at the standard of basic education of some of her peers who were coming out with 2.1s and firsts.

My ex's head of year made the point well: The fact is that a lot of this increase in graduates is made up of foreign students encouraged to come to the UK to study by Universtities desperate to make any money at all as the amount of money paid by this government to universities for each student drops every year.
The system requires that they pass despite poor English or mathematics in order that more are attracted to come the following year thereby helping the Unis stay afloat.
The tutors can't cope with the number of students they have to deal with as a result and so the standard taught drops.
And that's from a professor from an established (ie NOT a red brick) University.

If she'd continued to study at university in Germany rather than transfer to UK it would have taken longer to graduate (and indeed there are many who fail) but the standard of education received would have been far higher.
Besides, a German "Diplom" is worth more in educational terms than a UK BA so I am told.

I still feel it's a shame that more isn't made of the manual trades and professions anymore. Not everyone is made in a way that suits university education.

I really think we're missing a trick here. There are millions of people who would like to make things rather than spend their days pushing bits of paper around a desk making someone else money.

I tend to agree there, the raw figures don't tell the whole story. In particular, the German apprenticeship system has been a great success story, which has been missing in the UK since the apprenticeship system more or less collapsed in the late 60's early 70's.

Unfortunately, I have a feeling that things are changing and manufacturing industry's future is more than uncertain in Germany. This means that it is probably time to rapidly increase the graduate output in Germany, there are some signs that this is being recognised, but whether it will move fast enough is another question.

There is no question that the German Diplom is a better qualification than a BA or (my own) B.Sc. Unfortunately, there seems to be a fashion to move towards BA/B.Sc. qualification in Germany, theoretically, in order to be more easily comparable internationally. Unfortunately, in many cases it's a "Mogelpackung" which does not actually always match the international standards. For that, they are abandoning the Diplom, which actually has a very good reputation amongst Germany's main trading partners.


It is a shame, but it's a fact of life, that especially following the expansion of the EU, this is not Western Europe's future. Whether we like it or not, the future for Western Europe lies with service jobs for those less-qualified and very highly qualified research/development future orientated development jobs (of whatever sort), if we don't manage the turn-round, we're dead on the floor in ten or twenty years!

I think your view of the service industry is a little bit dated. I have one piece of paper on my desk and that's just for scribbling on. I could push it around a bit but it won't get me anywhere.

I'm sure there are a lots of people who want to make things, but if you can't undercut the East then you might as well forget it.

Frankly, the move the BA-MA in Germany could be the rescue of the German university system, which has been collapsing for a quite a few years now, as it would be a chance to come up with modern and teachable courses (it is for example not really necessary to have latin as a pre-requisite for social science degrees - modern foreign languages would be much more useful). But I fear the entrenched complacency of the professors will prevent this happening. While standards in engineering and some but not all science have been kept up, the level elsewhere can be pretty horrendous. The many articles in the German press on the horrors of German universities are really not exaggerating.

This may be true on the arts side, which I must admit to not knowing much about, but on the engineering side it's a potential disaster. The Diplom is a much more rounded education than the B.Sc., amongst other things because it includes much more practical application work, rather than just pure theory. Admittedly, the courses are a bit on the long side (doing their bit to contribute to the "oldest students / youngest pensioners" label, perhaps?).

Actually, the courses aren't that much longer, one problem is that there is no pressure on the students to finish in the planned timescale, so a substantial number of students dawdle their way through. The problem has at least been recognised and steps are being taken to do something about it - whether they'll actually be able to push through student fees remains a very open question though!

Louise, I would like to put your name forward as the "Person On The Britboard Who Talks The Most Sense".

I seem to remember you being allowed to study for your Diplom for up to 7 years RMA Since I was paying the bill this was rather a scary thought - Still, at least it keeps them out of the arbeitsamt for a few years longer eh?

Given the increased number of students going through universities in the UK and the fact that most of them take out student loans, I'll be most interested to see how much unpaid debt there is ten years time.

Went to the Natwest with my German girlfriend to get an account opened for her within a week of her arriving in the UK and was horrified to find that she was able to get a student account with a £2,000 agreed overdraft, a credit card with a £1,000 limit and a Switch card (as it was then) with a cheque book and £100 cheque guarantee facility.
She provided no guarantor whatsoever, her previous address was our old address in Germany, and clearly she had no credit history in the UK.
I guess because she was German she rejected the offered borrowing and just took the cheque book and card.

Given the amount of debt these guys get into in 3 years plus, I wonder how many foreign students have been offered the same and have taken off without paying the banks back - Ultimately of course it's the rest of us who use the banks' facilities and stay here who pay for this debt.

Since this system was introduced after I left the UK, I don't know too much about the details. However, if I remember correctly, you only have to start paying back once you exceed a certain minimum income. I can only assume that these loans must be guaranteed by the government, otherwise the banks wouldn't play along. Indeed, if I'm not mistaken under the new Basel 2 regulations they wouldn't be allowed to!

So it's probably not higher bank charges that result, but higher taxes! :$

Renting v Buying

How about spending the best days of your life working all the hours God sends for 10- 20 years just to pay the morgage thats going up every month. Imagine it being repossessed because for one reason or another you could afford the repayments. Then it would have been like renting anyway but you would have wasted your life thats for sure unless you loved your job and you did not like socialising.
As Bradd Pitt says in 'Fight Club'

' Don't work in jobs you hate to buy the things you don't need'

Sorry, why does the mortgage go up every month? You lost me there.

The fact is that buying property is the best investment for retirement. And that's not just my opinion.

http://www.abendblatt.de/daten/2004/05/22/297755.html

In the film Fight Club did they show what they were all doing when they were 65..

I own two bungalows and am really glad ot that...

I miss Eurocheques...made money transfer between UK and Germany so easy...waaaaahhhh!!!

Why are you glad, don't you like stairs?

Also I had to wire some money from my Citibank UK Euro account to my Volksbank account, and those scumbags charge me GBP 30. Admittedly it arrived same day, but that wasn't one of my prerequisites. When I kicked up a fuss, that I couldn't just go to a German Citibank branch and take the money they suggested as an alternative that I pick up EUR500 every day from the cashpoint for free (over a period of a few months). Idiots. Citibank has gone dramatically downhill since they moved their call centre to India.

no, I don't like stairs...

but I'm glad because I have some financial security in addition to my pensions here...last few years of any pension plan are the most enriching (!!!), and it would be a disaster if I lose out on those years...

Luke - isn't that contravening that EU directive on bank transfers? If it's already in Euros then they can't charge you any more than a domestic transfer and however bad Citibank are I can't believe they could get away with levying those sort of fees for a domestic transfer. Write them a letter threatening to report them to the European Commission and I bet you'd get your money back. Sparda-Bank tried to do the same to me and that worked brilliantly - it still has to be the only time I have ever actually got a letter of apology out of a German firm.

I think the EU directive you're referring to, Louise, only applies to movements within the Euro Zone.

What is the single payments area?

It is the application to payments of the principle of the disappearance of borders. The guiding principle is to regard as domestic transactions, transactions which, even if they cross a border, are conducted in a single currency, the euro. It is therefore necessary that cross-border transactions should gradually be carried out at the same cost and take the same time as domestic transactions.

In each of the twelve national payments areas within the euro area, the costs of a transaction are the same, whether the payment crosses the road in a capital city or moves from one remote area to another. This principle of a single payments area transforms the twelve national areas into a single domestic euro area.

The same principle also applies to euro transactions to and from other EU countries.

Taken from:
http://europa.eu.int/rapid/pressReleasesAc...&guiLanguage=en

The problem I have is that my transfer was more than the EUR12,500 limit and that Citibank charges the same for a Euro transfer within the UK.
But at least I had a good row with them.

Creating industrial jobs in Germany (by a 'UK' company).

Never trust economist, as they are often wrong. The assumption that the English investment in banking and services is the future way to go, could certainly lead us to problems. We have allowed a huge number of our manufacturing companies to be either taken over or destroyed. This makes us very dependent on one field, and that is deadly. Economists at my bank hardly manage to figure out how things will be in 3 months let alone a year. I also remember most economists saying in 2001 how the end of recessions had come about and how the Internet and e-commerce would make the economy constantly grow for decades. (Oups)

Germany’s manufacturing base is even now managing to grow, this is due to the high investment in robotics and new technology!

****

The British university education system (BA / BSc) is good, but they should be used as a basis for a masters or a PhD (where appropriate). Generally speaking though it is not appropriate for engineering subjects as there are large gaps in knowledge! Or by themselves for office work!

The German system on the other hand is nowadays outdated. The system trains an elite few in the skill required to undertake PhD study, with the idea that they will take on roles as university academics rather than office workers. This historically was exactly what happened, but there is now a whole section of industry that is not covered by the appretiship system or by the diploma university system!

The last few right wing British governments (Thatcher / Major / Blair), have started a trend that will have serious implications on future generations, creating a nation that will start its work carrier with high dept, 30 to 40 thousand for sum! (I came out only owing 6 thousand, and it has been a struggle enough to pay this back, and I consider my employment status to be good).

It would be a good idea if they started making it financially unsound for German students to study more than a fixed time. Unfortunately this will put up the unemployment figures, which in turn is unfavorable to any government!

****

I for one, am considering having any children of mine (if I end up with some), doing jobs like plastering, tiling and plumbing, market sellers, etc. because those guy earn more that I do! No longer is it the case that a university education leads to employment with high financial gain, nowadays it is the bastards that manage to earn high and pay few taxes that come out winning.

***

The money offered to students by anything other than the Student loan company, is there to firstly win a future customer, secondly trap the student with high dept for a long period of time. I have a number of friends that after finishing university have been crippled by these types of dept. They always look cheap, but their low interest rates end about a year after graduating, leaving the ex-student with dept he can hardly afford to pay off!

This bank credits are only offered to EU students, with the knowledge the even if they can not find them straight away sooner or later they will be able to get them.

Your African or Asian student has no access to this and usually has to pay tuition fees of at least 7000 pound for a 3rd rate Uni (23 to 30 K for Oxbridge).

Anyone want to borrow my soapbox?

I always thought the difference between the UK and Germany in professions like engineering, accountancy. pharmacy etc was that in Britain after the initial degree you then have to follow extra training and exams organised by the professional societies and industry / hospitals to qualify fully as registered or chartered professionals, whereas in Germany the university degree is all you need. Is that not the case? Even for office jobs graduate training schemes are the rule in Britain, whereas my German friends seem to think that those types of training course would be insulting to them as graduates.

Incidently, the German girl who was offered overdraft, credit card etc was very unusual. Most EU students have enough difficulty even getting a basic account out of the UK banks these days (I know having tried to help someone on this last month..). Couldn't agree more though about the insanity of offering British 18 year old students credit cards and seemingly generous overdrafts...

Luke, morgage payments go up every month because interest rates go up every month! So if you are a first time buyer and you were paying £500 per month this time last year you will be probably paying around £600 to £700 pound this year. Ok its a bit more overtime but as the UK works the longest hours in and has the longest communtes in Europe you might be lucky to make 65!

Hey I think Bradd Pitts looking pretty good for 65!

65 what? kilos???