Germany: Cautious Optimism Amid the Growing Eurozone Storm

Three weeks ago, our featured finding looked at the despair and anger in Greece, the hardest-hit of Europe’s crisis stricken countries. This week, we look at the situation in Germany, the economic engine at the heart of Europe—a fellow Eurozone nation, but one facing very different challenges.
Germans’ faith in their institutions, for one thing, seems to be fairly resilient. In 2012, 38 percent of people say they trust their national government to operate in the best interest of society, less than for national and global companies (48% and 41% respectively) or the press (42%). German levels of trust in these institutions are thus higher than those of fellow Eurozone members Spain and France. If institutional trust has remained more robust in Germany since the crisis, it is hard not to conclude that a renewed sense of national self-confidence emerging from Germany’s seeming economic resilience, its government’s hardline position towards Europe’s debtor states, and its newly assertive European leadership position have all been factors.
Nonetheless, as in other developed economies, optimism about the long term is in short supply—when people were asked this year if they thought their children and grandchildren would have a better quality of life, fewer than three in ten Germans (28%) agreed, down eight points since 2007. Yet unlike Greece, just 25 percent feel things have become worse economically in the two decades since reunification, and only 27 percent feel society has become less equal and less healthy: 37 percent of Germans feel things have got better for both measures. Reflecting these levels of social and economic satisfaction, 35 percent of Germans—roughly the global average—believe that the rich deserve their wealth. This has risen six points since 2009.
A sense of vindication of Germany’s economic and social model is likely to be a key factor behind these figures, even if its current mini-boom is less spectacular than Greece’s bust. The challenge for German policy makers will be to maintain the level of social and economic cohesion in the face of the growing storm outside the country’s borders; for investors, the challenge will be to hold their nerve.
Finding from the GlobeScan Radar, Wave 1, 2012
This post was written by former GlobeScan Research Director, Sam Mountford.