Germany: Europe does not converge

German solidarity<p>German solidarity</p>

The German tabloid Bild questions the reasons that should force Germany to show solidarity with South of Europe. “Greeks are twice as rich as we German,” Bild’s headline remarked on February. “How is it possible? Greece needs again thousand of millions and we have to pay.”. These front page news fit with an usual message which German’s society critical and skeptical way of thinking receives perfectly well. Some similar to why we German have to suffer the consequences of Southern economies’ mistakes when they enjoy better living conditions that we have. Is it a truth or not? Are they reasonably complaining or not?

The question is that the EU is considering a third financial help package amounting €20,000 million of which 6,000 would come from Germany. The newspaper Bild wonders why this is so “if Greek holds bigger wealth than German.” According to ECB’s figures, a Greek household have an average wealth of € 101,900 while a German family does not reach €52,000. Bild gives several reasons: Greece’s population pay less taxes and consequently the country hardly progresses against fraud and evasión. Third fourth part of them own their houses compared with 44% of Germany’s where many people live in rented homes. Greek retired people receive 110% of their yearly average salary as German receive less than 58%.

Special tax

Liberal democrats’head Christian Lindner also thinks that before approving the new package for Greece, it may be good to see what the country could make on its own.

Indeed German central bank discusses in its January monthly report about advantages and disadvantages of paying a common special tax on private properties in order to reduce public debt of countries on the verge of bankrupcy. However, the institution underlines that a measure like this could only be introduced in cases absolutely severe. On the other hand, according to the Bundesbank, European countries more affected by crisis, are increasingly improving their economies thanks to progress in competitiviness and current account unbalances. The challenge continues to be the huge public and private debt.

Despite all, the reality is that Europe does not converge. Differences between north and suth have been growing since the crisis started in 2008 and there are no signs of change. Where are we going to? The Institute of the German Economy (IW in its German initials) points the solution is to make structural reforms and of course relax labour and good and services markets. As always: the advantage of Germany is its state of the art and advanced industry. Which is the path Spain should best follow? The IW proposes the European Regional Development Fund as an EC’s financial device to help profitable investments in troubled economies.


German finance minister has made a similar proposal for Greece. Berlin wants to help actively the peripheral country with something more than money. As said by Wolfgang Schäuble, Germany would like to offer Greece economy and finance know-how as well as cooperation to make them move forward by creating a Greek development public bank, teaching public finances officials and so on.

The reality is not that Greek households are wealthier (what if one owns a house but any member of its family has a job?, but they suffer a severe burden after crisis’ adjustments.

About the Author

Lidia Conde
She studied journalism at the Autonomous University of Barcelona. Since 1991, Lidia lives and works in Germany as a correspondent for several Spanish newspapers, in which she has covered the fall of the Berlin Wall and the German reunification. Seeking an answer to how Europe could become competitive and fair, too.

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