The German Mittelstand

Unloved guarantor of prosperity

Why Germany supports the euro

Anyone looking at Germany from outside the country might well sometimes be troubled. The only issue that still makes for excitement in this country is of central importance for Europe - if not indeed for the world economy: the debate about the euro. Meanwhile, a party has even been established that is clamouring for the “exit” of Germany from the monetary union, as if it were a club membership. It wants to compete in the national elections in September 2013. In addition, in regular surveys a large number of German citizens “wants the Deutschmark back.”

But closer examination shows there is no cause for concern. In the population, the new party has little support: in surveys, they finally came to two percent, and would therefore not even make it into the Bundestag under German electoral law. At the same time, the approval ratings for Chancellor Merkel, who wants to preserve the euro with carrot and stick, are stable at a high level. And what is true for the majority of citizens, also applies to the majority of companies. For they know very well the dangers leaving the euro involves.

First, increasing transaction costs would fall to the companies, because they would again have to hedge against currency fluctuations and pay exchange fees. Much more serious, however, would be a dramatic appreciation of the German currency against the euro and other currencies. An export slump with rising unemployment would be the inevitable result. And all emotions aside, this is no real alternative. The euro, even if it is not loved, is accepted, at least as a guarantee of prosperity.