Post date: Apr 02, 2013 2:22:18 PM
The economic evidence shows Germany still provides the best example of how to run an economy, says Investec's Philip Shaw, despite a recent stutter.
LONDON, ENGLAND, UK (APRIL 02, 2013) (REUTERS) - INVESTEC CHIEF ECONOMIST, PHILIP SHAW,
"If one casts one's mind back 10 or 12 years ago, you could actually remember that Germany was the first country to break the fiscal rules in the Euro and the first to be launched into the excessive deficits procedure. So I wouldn't say Germany is being whiter than white throughout the period of the single currency. But certainly, if you look at the economic evidence, at the moment Germany is the shining example of how to run an economy - it's liberalised its labour market and its welfare laws over the last 10 years, so it's highly, highly competitive. It's got a thriving manufacturing industry even though the economic numbers more recently have stuttered a bit. And of course, it ran a budget balance in 2012. So I think Germany does have some right to lecture the other countries but it's not been perfect.
(QUESTION: Alright. Germany aside, is there anything there that you as an economist, can get your teeth into and say look, we're going in the right direction, this is progress, these green shoots could turn into something?)
Well in terms of economic news, I think the answer has to be no. Two or three months ago, we were looking at perhaps a little bit of a bottoming out of some of the shorter term indicators. But certainly what we've seen in February and March and so far in April hasn't been particularly encouraging with if anything that the survey's weakening. What we do have is the financial indicators have got better since last summer. Particularly encouraging was the limited reaction in European markets to what's been happening in Italy and Cyprus over the past couple of months which suggests that at least, we're not going to get a big tightening in credit conditions. But on the economic side, no progress, I'm afraid."