In just ten years, Germany has gone from being the sick man of Europe to being a role model that the eurozone's distressed economies are instructed to emulate. But there is much in the German model – particularly its neglect of service-sector reforms – that economies struggling to boost productivity should ignore.
BRUSSELS – Ten years ago, Germany was considered the sick man of Europe. Its economy was mired in recession, while the rest of Europe was recovering; its unemployment rate was higher than the eurozone average; it was violating the European budget rules by running excessive deficits; and its financial system was in crisis. A decade later, Germany is considered a role model for everyone else. But should it be?
BRUSSELS – Ten years ago, Germany was considered the sick man of Europe. Its economy was mired in recession, while the rest of Europe was recovering; its unemployment rate was higher than the eurozone average; it was violating the European budget rules by running excessive deficits; and its financial system was in crisis. A decade later, Germany is considered a role model for everyone else. But should it be?