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ECONOMY

Saving the German way

Germans might be known as a nation of tightwads, but there’s more to the country’s thriftiness, writes Roger Boyes, the Berlin correspondent for British daily The Times.

Saving the German way
Photo: DPA

There are different ways to lose your head, some more successful than others. One method is the Hitler way. You sit brooding in Madame Tussauds, wondering whether you should first poison Blondie and then Eva, or vice versa, and then suddenly a man slides over the table and grabs you in a headlock like those fake wrestling shows on television. Then, of course, your head – pure beeswax – comes off.

The other way, I was reminded by a old Kirsten Dunst film on DVD this week, is the Marie Antoinette method. You have a glittering lifestyle in Versailles, interrupted only by typically surly French peasants demanding more bread. And since you are a compassionate person you tell them to eat cake instead.

They don’t like it and, shortly afterwards, you lose your head.

Berlin’s modern day equivalent of Marie A. is, of course, Finance Senator Thilo Sarrazin. He told the peasants – sorry, Hartz IV recipients – that they can feed themselves on €3.98 a day, significantly under the €4.25 daily dole standard in Germany. Sarrazin did not lose his head for this suggestion, but one cannot help feeling it is only a matter of time.

It was wet and cold the other day, and I was short of cash, so I decided to try out one of the Sarrazin menus. And to my surprise, I found he was right: müsli, banana, coffee, yogurt, honey for breakfast; vegetable soup for lunch; bread, cheese, ham for supper for a grand total of €3.80. Yet many hovering above the poverty line in Germany prefer to go to McDonald’s where the value meal Sparmenü costs €4.99.

Los Angeles is apparently trying to ban more fast food restaurants from its poorer city centre, but there is no sensible (or democratic) way that we can persuade people not to eat Happy Meals.

The Sarrazin arithmetic, however, and the way it is being rejected by those who most need to save money, has come as a revelation to me. There is indeed a new austere mood in Germany – one could call it the Neue Sparsamkeit – yet it is the well-off who are starting to count the pennies rather than the poor who often live surprisingly wastefully.

My friend and neighbour has three fat cars but buys damaged biscuits directly from the Bahlsen factory in Tempelhof. He eats them at motorway cafes, preferring them to the dubious microwaved lasagna found at autobahn petrol stations. This strikes an emotional chord for me, as I clearly remember the sweet smell of the Bahlsen factory in Hannover-Linden in the early 1960s, when my parents took me to buy cheap Leibniz Kekse there. Of course, that was 40 years ago in an era when people still saved string.

The German middle class, however, is behaving as if this era is returning: as if prosperity, Wohlstand that is, has to be guarded by emergency measures. Even the well-off have to sign up for the Neue Sparsamkeit if they have young children or financially dependent elderly relatives. A family from Berlin now has to return from their annual skiing holiday in the Alps via Herzogenaurach in Bavaria in order to visit the Adidas factory outlet and stock up on cheap shoes for the kids.

Not poverty is driving this new thriftiness, of course, but an attempt to maintain an increasingly expensive family tradition (the ski holiday) and meet the social expectations of the children (designer clothes so they won’t be mocked at school). There is no shame anymore around German middle class dinner tables about buying at discount grocer Aldi. Only with the wine do you still have to pretend that it comes from the little French shop on the corner.

One neighbour now routes his business trips around Memmingen so that he can buy his suits directly from the Hugo Boss outlet. And a lawyer friend regularly goes to auctions held by Berlin’s BVG public transportation system largely because he has an obsession with umbrellas. Does such a thing as parasolphilia exist?

Quite simply, saving money is a return to the solid middle class value of good housekeeping. The new rich expose their vulgarity by throwing away money, so it follows that saving money expresses a quiet dignity. It is not being miserly but rather a respect for work, for craftsmanship, for valued possessions and the priorities of life.

As for hobby gardens, Germany’s Schrebergärten are no longer the last preserve of the Spießer, as stuffy squares are known here. Now such small plots of earth are being used by academics, architects and even journalists, to grow vegetables and fruit. The surplus gooseberries, the ones not made into jam, are then given in part-payment to the babysitter or as a peace offering to the teacher upset by the boisterous behaviour of your difficult child.

The Neue Sparsamkeit is not a Fad. Nor is it a rebuke to the genuinely poor. The German middle class is simply developing defences at a time when the world seems to be crashing down on their heads. It is not crude Geiz – that is stinginess – to buy cheap biscuits at the Bahlsen factory. It is rather a rejection of consumer fetishism, a long overdue return to bourgeois values.

For more Roger Boyes, check out his website here.

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ECONOMY

How is Denmark’s economy handling inflation and rate rises?

Denmark's economy is now expected to avoid a recession in the coming years, with fewer people losing their jobs than expected, despite high levels of inflation and rising interest rates, The Danish Economic Council has said in a new report.

How is Denmark's economy handling inflation and rate rises?

The council, led by four university economics professors commonly referred to as “the wise men” or vismænd in Denmark, gave a much rosier picture of Denmark’s economy in its spring report, published on Tuesday, than it did in its autumn report last year. 

“We, like many others, are surprised by how employment continues to rise despite inflation and higher interest rates,” the chair or ‘chief wise man’,  Carl-Johan Dalgaard, said in a press release.

“A significant drop in energy prices and a very positive development in exports mean that things have gone better than feared, and as it looks now, the slowdown will therefore be more subdued than we estimated in the autumn.”

In the English summary of its report, the council noted that in the autumn, market expectations were that energy prices would remain at a high level, with “a real concern for energy supply shortages in the winter of 2022/23”.

That the slowdown has been more subdued, it continued was largely due to a significant drop in energy prices compared to the levels seen in late summer 2022, and compared to the market expectations for 2023.  

The council now expects Denmark’s GDP growth to slow to 1 percent in 2023 rather than for the economy to shrink by 0.2 percent, as it predicted in the autumn. 

In 2024, it expects the growth rate to remain the same as in 2003, with another year of 1 percent GDP growth. In its autumn report it expected weaker growth of 0.6 percent in 2024.

What is the outlook for employment? 

In the autumn, the expert group estimated that employment in Denmark would decrease by 100,000 people towards the end of the 2023, with employment in 2024  about 1 percent below the estimated structural level. 

Now, instead, it expects employment will fall by just 50,000 people by 2025.

What does the expert group’s outlook mean for interest rates and government spending? 

Denmark’s finance minister Nikolai Wammen came in for some gentle criticism, with the experts judging that “the 2023 Finance Act, which was adopted in May, should have been tighter”.  The current government’s fiscal policy, it concludes “has not contributed to countering domestic inflationary pressures”. 

The experts expect inflation to stay above 2 percent in 2023 and 2024 and not to fall below 2 percent until 2025. 

If the government decides to follow the council’s advice, the budget in 2024 will have to be at least as tight, if not tighter than that of 2023. 

“Fiscal policy in 2024 should not contribute to increasing demand pressure, rather the opposite,” they write. 

The council also questioned the evidence justifying abolishing the Great Prayer Day holiday, which Denmark’s government has claimed will permanently increase the labour supply by 8,500 full time workers. 

“The council assumes that the abolition of Great Prayer Day will have a short-term positive effect on the labour supply, while there is no evidence of a long-term effect.” 

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