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The strength of the German economy

Mark Mardell | 11:48 UK time, Friday, 5 September 2008

Craning our necks to look up at made both myself and my producer feel slightly queasy. But once you are at the top the view is magnificent, particularly over the Rhine. The panorama also says something about the strength of the German economy, despite recent figures indicating Germany may well hit a recession by Christmas.

dusseldorf.jpg

You can spot many of the corporate headquarters that dot the city. Here is the headquarters of an advertising agency, Dusseldorf is also a centre of the fashion industry and a magnet for legal firms. The buildings are aggressively modern in their architecture, bulging out at odd angles, covered in vivid splashes of colour, clad in shiny metal plating. But the city takes strength from the old as well as the new.

So far one could say much the same for London and many other major cities. But the difference is that beyond the neat, suburban houses on the banks of the river are the smoke stacks of the Ruhr, long the heart land of the German heavy industry. Unlike most Western countries Germany never got rid of its coal and steel industries. Recently there's been a growth of more modern, very high-tech and high skill manufacturing companies.

One of them is which because a public company a couple of years ago. They make huge lifting gear for ports, some of it designed to haul those big container boxes around. The Chief Executive Harald Joos likes to say that as long as there is gravity the company will be in business. But Newton's laws are only a foundation for success. They are booming because of the growth in this business and the building of ports that is going on in the Far East and Middle East in countries that apparently haven't caught a cold, despite America's bout of sneezing.

I ask Mr Joos what the future looks like for his company, with all the gloomy predictions about the German economy.

"Today, if I look into my order books, I do not see one country where we see today a recession. In US measured dollars, we have strong order intake, on the level of 2007 and you know that 2007 was a bad year. Western Europe, especially Germany is very strong today, emerging markets like Brazil, India, Arabian countries and Russia are providing very strong orders. We had a fantastic third quarter worldwide. And that means that in our three segments - industrial cranes, port technology, and services, we had very good figures."

Serious economists tend to sniff when British people mourn the loss of manufacturing industry but does Mr Joos think his country made a wise decision?

"Very wise. In the years 2002/2003 many companies did their homework, restructuring work in their industries, this is the basis for the strong growth rates we had last year and also this year."

Dusseldorf is also famed for its trade fairs and shows. This week it is the turn of the motor homes. Prosperous, retired couples are the main browsers here and perhaps they are less worried than some other Germans about rocketing food prices and energy costs. For Germany's real problem seems to be in the understandable fall in consumer confidence. Ralf Torresin from shows me around one vehicle made especially for the show : a collection of good ideas from enthusiasts turned into a real vehicle, including fridges on the inside and out (so you can grab a beer on the BBQ) big computer screens and automatic roof racks. But I wanted to know from Torresin how is business?

"The European market is quite hard but it's not that bad, so we think we will have a good exhibition here and a good season next year. People are worried but not in a big way. They just keep a little bit more distance and wait a little longer".

I should stress that many business that we asked for interviews turned us down. Too busy, too short notice, they said. I suspect the ones that agree were the ones with a better story to tell. Certainly one of Germany's leading economists Gustav Horn, the Director of the Macroeconomic Policy Institute at the sounded pretty gloomy about recent figures released by .
"The Germany economy is heading for a major weakness. Recent data pretty bad, orders are decreasing for example, revenues in the retail sale sector are decreasing. We are heading for a recession, we are not yet in it. But I expect that we in October/November will be in it and that then growth figures will be even negative".

He thinks the European central bank was wrong not to lower interest rates.

"The ECB should have already decreased interest rates because it must be pre-emptive in order to avoid a crisis, but it's very late now, it's too late to avoid the crisis. Instead the ECB has raised interest rates and that's the wrong direction. So I'm afraid monetary policy will certainly worsen the weakness instead of dampening it. I expect interest rates to be fairly constant until next year, then the ECB will be forced to lower interest rates but that's much too late".

Do you think the bankers should act and what can the politicians do ?

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