Britain and Germany are failing differently

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Karl Marx, Hans Holbein, George Frideric Handel, Kai Havertz: some Germans do their best work in London. This, plus Germans being, in my experience, the best English-speakers on the continent, can feed the sense that these are kindred countries, despite the first half of the last century.

But Germany specialises in manufacturing. Britain is the second-biggest exporter of services in the world. Germany has a spread of important regions. Britain is more dominated by its main city than perhaps any rich nation of significant size. Germany has coalition governments, with three parties in the current one. British politics is so winner-takes-all that Keir Starmer got a 174-seat majority from a 34 per cent vote share. Germany’s fiscal policy is prudent to a fault. Britain has not run a budget surplus since the turn of the millennium. Germany is federal. Britain is centralised. Germany was a founding member of the European project. Britain joined late and left.

Even the texture of life in these countries is exactly different. You can ride a space-age train across Germany and then see someone using a fax machine on a non-ironic basis. Britain is better digitised but less good at tangible infrastructure.

These are two distinct, in fact almost oppositional, ways of running a medium-sized, high-income democracy. Yet both are converging on one thing: failure. Britain’s troubles are more famous and chronic, while Germany’s might be more acute. It was the worst-performing major economy in 2023. Its once-serene politics are deteriorating.

The lesson? Never idealise other countries. It feels like a cosmopolitan thing to do, but it is the ultimate in parochialism. The left are repeat offenders. The Sweden-worship of the 1990s was credulous enough. But during the Angela Merkel era, Germany was Shangri-La for UK and US progressives, who hailed proportional representation over brute majoritarianism, industrial strategy over laissez-faire, soft power over Anglo-American militarism. Berlin itself — a hipper and less gilded city than London or New York — became proof of concept.

Well, time has complicated the picture. Multi-party government, it seems, can bring indecision. Shaping the economy can mean backing existing industries over emergent ones. Soft power can be a euphemism for naivety in the face of mortal enemies. Having lots of fine cities but no megalopolis can mean forgoing the economic benefits of agglomeration.

When two such different countries get into such similar ruts at the same time, we should doubt if there is a “right” model. What there are are trade-offs. Apart from the basics — property rights, tax collection, universal public services, and so on — almost no policy is an unqualified good. Making one thing better will tend to make another thing worse. Leadership is a matter of choosing which problems to have.

Germany’s choices weren’t wrong. It is still richer than Britain. But if the costs and perverse outcomes were hard to anticipate in Germany, imagine how much harder from abroad. This is the inherent risk of adoring foreign exemplars. The UK and especially the US are set on emulating industrial strategy, but without the pedigree for it, or sufficient awareness of its mixed track record.

In the end, which of these two unalike countries is in more trouble? Economically, Britain. Germany carries less public debt. Its quest to make fewer machine parts and more advanced technologies is entirely doable over time. There is the cushion of the European single market.

On the political score, though, Germany’s extremism problem is worse. It has a Kremlin-smitten far left, not just the most strident of the major hard-right parties in Europe. And the advantage of Britain’s Napoleonic centralisation is a ruthless decisiveness. A bad prime minister or two can (and did) wreck things. But a first-class one would get the country moving again.

For better or worse, France is Britain’s real twin: in per capita income, in maritime exposure, in being a unified state for so long, in hoarding so much in its capital, in having lost a vast extra-European empire. A Tale of Two Cities is not about London and Munich. Even that Anglo-German point of contact, football, is a laughable mismatch. Germany has four World Cups to England’s one. The fascination in this bilateral relationship lies in the (peaceful) contrast. How droll, then, that when the two sides arrive at last at something in common, it is national malaise.

Email Janan at [email protected]

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