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Convergence between Germany and the UK

Convergence between Germany and the UK

In elections and economies, the similarities are striking 

by David Marsh

Wed 6 May 2015

The UK election on 7 May will confirm a phenomenon that many may find surprising, in view of Britain’s non-membership of the euro and the debate on whether Britain should leave the European Union: Germany and Britain are becoming more similar.

They are the two largest economies in Europe, both heavily wedded to trade with the rest of the EU (57% of Germany’s goods and services trade in 2014, 49% of Britain’s). GDP in 2014 was $3.86tn and $2.95tn respectively, according to the IMF (against $2.85tn for France, $2.15tn for Italy). They have the two largest populations: 81.1m and 64.5m (63.9m for France, 60m for Italy, the IMF says.) GDP per capita is almost the same: $47,600 and $45,700 ($44,500 for France, $35,800 for Italy).

Over the six years 2009-14 affected by the financial crisis, GDP in both countries has grown by an annual average 0.7%. Unemployment is around the lowest in the EU: 5% last year in Germany, 6.2% in the UK (10.2% in France, 12.8% in Italy).

There are differences. In budget deficits and balance of payments, the countries are mirror images. Most strikingly, Britain’s current account deficit last year was 5.5% of GDP, Germany’s surplus was 7.5%; both figures appear unsustainable. Germany may need a more rigorous approach to state finances. Its ageing and shrinking population and its parlous position as the biggest euro area creditor will ensure that it has to dig deep into savings. According to Eurostat projections, the two countries’ populations (Germany’s falling, the UK’s rising) will converge between 2045 and 2050 at around 76m.

Headline-dominating UK political fragmentation is a fact of life in Germany. The 67% of the votes that, according to opinion polls, the Conservative and Labour parties may attract on Thursday is the same combined proportion as Germany’s two main groupings gained in the October 2013 election. Angela Merkel’s Christian Democrats and her Bavarian sister party, the Christian Social Union, won 41.5% of votes against 25.7% for the Social Democrats. It may take weeks for Britain to form a coalition government under Labour or Conservative leadership. Welcome to the club. The Grand Coalition in Germany took more than two months to put together between October and December 2013.

The ebbing of support for the major parties has proceeded at a roughly equal pace. In the four UK general elections this century, in 2001, 2005, 2010 and 2015 (assuming 67% for Conservatives and Labour on Thursday), the two leading parties will have scored a combined average of 68%. This is the same as for the two German Volksparteien in 2002, 2005, 2009 and 2013.  

Post-war fragmentation has developed for broadly comparable reasons: reunification in Germany, devolution in the UK. Not counting the Federal Republic’s first eight years after its establishment in 1949, when splinter parties were jostling for influence, in the 30 years between 1957 and 1987 the two main German parties took 80% to 90% of the votes. Fracturing became manifest in 1983, when the Green party entered parliament, and took full hold after reunification in 1990 with the advent of the east German left-wing Bündnis 90 (now partners of the Greens) and the former communist Linke party.

In the UK, two-party dominance has been still more prevalent. Conservatives and Labour took between 87% and 97% of the vote in every election between 1945 and 1970. Labour lost elections in 1951, 1955 and 1959 with 48.8%, 46.3% and 43.8% of votes cast – results of which Labour leader Ed Miliband can only dream, and above the 43.2% achieved  by Labour under Tony Blair in 1997, the first of his three consecutive general election victories. The two big UK parties achieved 70%-80% of the votes between 1974 and 2005, similar to Germany, where this was the position between 1990 and 2005.

Fragmentation through regional parties (especially the Scottish Nationalists) accelerated in the UK as a result of decentralisation since 1997. Both the UK and Germany have seen a post-cold war electoral syndrome: political fickleness among an increasingly wealthy, globalised and mobile population less wedded to traditional causes, more cynical about politicians’ promises and no longer willing to vote along established lines (if at all). 

We will see a lot of this on Thursday. It’s part of a European trend – and Britain has become very European.

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