The trouble for the UK is that its main source of exports is the US – accounting for 13.1 per cent of our exports.  Next on the list is France – oh dear, Mr Sarkozy may love us, but it is difficult to love France’s economy.     In third place is Germany, accounting for 11.2 per cent of our exports.  Ireland, another country with a troubled economy is our fourth main export market, and the Netherlands fifth.   It is quite interesting, isn’t it? We supposedly live in a global village and yet three of our closest neighbours, France, Ireland and Holland, are still among our key export markets.

But of that list, the real focus of attention should be Germany.    In fact we import more from Germany than any other country – if only she could get moving then maybe the UK could up its exports.

Here at last there is some good news.    Earlier this week, Germany’s IFO index was out, and it was good.

The index for tracking the Business Climate hit 10.4.8 in March.  Although it did slightly better than that last year and the year before, 2007 and 2006 aside, the index is now at its highest level since 1993.

In January, industrial production rose sharply too, and construction has positively surged.

At the end of last year, it is thought Germany’s net public debt fell to around 64.5 per cent of GDP, a little higher than in the US, but a lot smaller than the level currently seen in Italy and Japan. But the point is, year on year, Germany is now turning out surpluses.  The National Institute of Economic and Social Research believes Germany’s public debt will fall to  52.1 per cent of GDP by the end of 2009. 

In other words, the cost of re-unification has all but been paid for.

It seems unlikely Germany will enjoy the kind of growth seen in the US in recent years, but most forecasts are predicting growth of between 2 and 3 per cent over the next five years.

Germany’s problem is that the US is its second-most popular destination for exports, and the UK the third-most popular destination.    So a slowdown in the US, and then here, could hit Germany down the line.

What we need is for Germans to start discovering the joys of retail therapy.    If consumers were to start borrowing more, then Germany could pull through a slowdown in its main export markets – and if the euro continues to rise, maybe some of those consumers will buy British. 

© Investment & Business News 2013