Spiegel ONLINE 1/2/08 

Only China is still ahead: Germany, long shunned as a business location, is getting once again top marks for its competitiveness, a survey of managers shows. Reforms and modest wage settlements are starting to pay off.

Düsseldorf - European Champion Germany: Among the world’s top ten economic powers, Germany - when compared to other European countries - landed squarely in the number one spot. On the second rank is Switzerland, followed by Austria and Britain, which share third place – showed a survey by Droege & Company for the newspaper "Handelsblatt".

Well over half of all surveyed approximately 1200 top managers (59 percent) from six European countries, consider the competitiveness of Germany as "very good" or "good" and assigns the Federal Republic an average rating of 2.5 on a scale of one to five.

Five years ago merely thirteen percent of respondents gave a similarly positive verdict, reports the newspaper. Since then, the reputation of Germany as a business location as viewed in the eyes of managers on average increased by a total of more than one grade.

“Over the past few years, the German economy has indeed become increasingly more competitive - especially thanks to entrepreneurship, but also due to collective bargaining and political efforts," said the Chairman of the Expert Council, Bert Rürup. Companies continuously rebuild their organizational structures and - together with the unions - established moderate and flexible wage settlements. The previous (center-left) red-green government coalition helped already to make the labor market more flexible, and today’s (center-right) grand coalition further contributed to raising location-based tax attractiveness.

Economy Cools Off

In a worldwide comparison, the managers surveyed assigned the highest grades in terms of competitiveness to China. In second place here followed Germany and Switzerland.

Despite all its competitiveness, Germany too is most likely not going to get spared from a slowdown in the economy. So far, the federal government expected a growth rate of at least two percent, but after some critical analysis by various experts even German Economics Minister Michael Glos adjusted the forecasts of the federal government downward. "The economic research institutes have repeatedly lowered their forecasts. That’s a fact that also the federal government can’t overlook," he said to the newspaper "Bild.”  "For an accurate prediction, it is still too early. Overall, I anticipate for trends to hold steady, with an economic growth of just under two percent in 2008."

As the main reason he cited the real estate crisis in the United States: "The financial crisis in the United States is not over yet. There are - figuratively speaking - still many undiscovered corpses in the cellars of the international banks." A big danger, which poses the risk that loans for midsize companies become more expensive.
 
With the Institute for World Economics in Kiel (IfW) and the Munich Ifo-Institute in December, two renowned economic institutes have predicted a weakening of economic activity in 2008. The IfW revised its growth forecast for next year from 2.4 percent to 1.9 percent. Even more skeptical is the Ifo Institute: Instead of 2.5 per cent it forecasts a mere 1.8 percent of growth.