Is Standort Deutschland still attractive?

Opinions on this subject differ widely.According to a recent survey of the Bertelsmann Foundation, Germany as a business location is in a steady decline since 1994. It was placed at the bottom of 21 countries the Bertelsmann gurus examined.

Ernst & Young, on the other hand, in a worldwide survey of 513 business executives, recently ranked Germany the third most attractive country in which to invest, behind China and the United States. So please take your choice.

There are undeniable facts. Although Germany is now pulling out of two recessions in the past four years, the recovery is modest and 'remains unbalanced, with domestic demand still dormant', as the IMF warned in its annual report.

The much noted monthly poll of 7,000 companies regularly performed by the IFO Institute in Munich to gauge corporate confidence in Germany rather unexpectedly showed a slight downwards trend in November (94.1 points against 95.3 points in October) after the previous five months had seen steady improvement, a setback obviously due to the high oil price and the over-strong euro.

IFO spokesman Gernot Nerb advised, however, that hopes for a further growth of the economy (general GDP growth estimate for 2004: 1.8%) must not be buried.

Quite a few observers feel that the country against all odds is slowly but surely back on track and that the first signs of a national turn-around are starting to show. Deutsche Bank and Dresdner Bank reported healthy profits in the first half of this year after heavy losses.

Yielding to the pressure of globalisation, German workers are prepared to work longer hours and do without cosy privileges and bonuses won in the fat years. 'Germany will remain an export machine that keeps running and running', said Holger Schmieding, Economist of the Bank of America.

Particularly exports to the new members in the East have increased dramatically since 1st May, the day of the EU enlargement.

A lot remains to be done to restore the tarnished image of Germany at work. Long overdue structural and reforms, hurtful to many Germans spoiled by the 'Wirtschaftswunder' years, the times of the country's spectacular economic rise, have to be implemented.

The Germans, however, have shown on many occasions in the past that in times of crisis they are well able to pull themselves up by their own straps. Nobody should expect Germany re-defining itself as 'low-rent and cheap' and enter a cutthroat cost competition with low-wage countries.

Rather, Germany must and will return to its grand tradition of self-discipline and position itself once more as creative, highly technological and innovative. Only this will make 'Standort Deutschland' attractive in the years to come, reasserting itself as the economic engine of Europe.