Most people in the EU, like Britons, are enduring sluggish economic growth, fearing job losses that will affect themselves and their families and bracing themselves for painful spending cuts to public services. Just as the coalition plans to put 490,000 public sector workers on the dole, so public sector workers from Paris to Prague are grimly waiting for the same thing, and few are confident that the private sector will be able to create the jobs for those about to become unemployed.

There is, it seems, one exception. While average unemployment in the Eurozone is 10 per cent and growth expected to be around 1-2 per cent in 2010, Germany, Europe’s economic powerhouse has seen strong growth and unemployment that, at 6.7 per cent is lower than Britain’s 7.8 per cent, and falling steadily, while ours is expected to increase dramatically. So, what are the hallmarks of the German model, and is it as successful as it seems?

Most economists are predicting 3.5 per cent growth this year with two per cent in 2011, another year of global uncertainty, where many countries, including Britain, may fall into a double dip recession. German finance minister Rainer Bruederle gleefully told reporters last week that Germany was ‘on the expressway to full employment’. After understandable teething problems following reunification, Germany has adjusted and corrected the problem that, in geographic terms, it was economically divided between a strong west and a weak east.

To its credit, the coalition has not ignored Germany’s success, although it is highly doubtful that they have the political will or understanding to put a credible programmr into practice. David Cameron has expressed his intention to establish UK research institutes and emphasised the need for investment in manufacturing and infrastructure, including green technologies – just like the Germans do. But such talk is wholly inconsistent with the coalition’s policies, most aptly summed up by its decision to refuse the Sheffield Forgemasters £80 million loan, despite the obvious economic and social benefits.

The truth is that the Conservatives will have to eat a large slice of humble pie and effect a serious change of mindset to emulate the German story. While Britain has, for decades, run an export deficit, Germany has consistently run a surplus. They have done so even this year. But their exporting power, which underpins any country’s recovery from recession, is the result of a long-term commitment to innovative manufacturing – and a banking system that does not follow the short-termist approach marked by reckless gambling and extortionate bonuses that have scarred the UK.

In other words, one lesson Britain can and should learn is the need for a balanced economy, marked by sustained investment in manufacturing goods; in our case green technologies would seem an obvious option, and much less reliance on and kow-towing to the financial sector.

Our mindset also needs to change. We forget that highly skilled professionals such as engineers or plumbers, despite being increasingly short supply in Britain, are looked down upon. In Germany they are rightly admired as the skilled and important workers that they are.

That being said, Germany’s economy is not without its own imbalances which we would do well to avoid. It saves too much and its refusal to increase imports makes life difficult for other countries, particularly its European neighbours. Secondly, its long-standing commitment to wage restraint is overly stringent and becomes part of a vicious circle that prevents the increased consumer spending that would improve the quality of life of Germans and the economies of its neighbours.

Nonetheless, the fact remains that Germany’s export created savings are then channelled into sustaining and promoting industry. In recent years it is this that has enabled them to create the largest and most profitable green technologies sector. It will take a radical change in the UK to achieve that, but it is a target we should be aiming at.

But the real key is the long-standing shared beliefs held by politicians from both the governing Christian Democrats (CDU) and the opposition Socialists (SPD), as well as business and unions, with the latter strongly involved in the way their workplace is managed and run. But this is because the CDU, for example, are not a conventional conservative party. They may be socially conservative but their economic approach is one that could fairly be described as ‘social welfarist’. The chances of the coalition having any time for the views of unions are slim to none, which is all the more reason for Labour to bridge the gap between unions and business to build our own coalition of shared economic interests. We have to persuade the Conservatives that Britain cannot have such a blinkered reliance on the City. Economic dynamism exists north of the Square Mile.

Despite the fact that Germany would do well to loosen its purse strings, increase wages and encourage higher levels of consumption the evidence suggests that its economic model is resilient and working. At a time when most EU countries are struggling, Germany is powering ahead. The coalition, and Labour, ignore this success at their peril.

Photo: Steve Grant