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Karl Marx, Hans Holbein, George Frideric Handel, Kai Havertz: some Germans do their best work in London. This, coupled with the fact that, in my experience, Germans speak the best English on the continent, can fuel the feeling that they are kindred nations, despite the first half of the last century.
But Germany specializes in manufacturingBritain is the world’s second-largest exporter of services. Germany has a large number of important regions. Britain is more dominated by its main city than any other wealthy 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 won a majority of 174 seats from 34 percent of the vote. 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 centralized. Germany was a founding member of the European project. Britain joined late and left.
Even life in these countries is completely different. You can travel on a space train through Germany and see someone using a fax machine without irony. Britain is more digitalised, but not as good at tangible infrastructure.
These are two different, almost opposite, ways of managing a mid-sized, high-income democracy. Yet both converge on one thing: failure. Britain’s problems are better known and chronic, while Germany’s may be more acute. It was the top-performing economy in 2023. Its once-serene politics are deteriorating.
The lesson? Don’t idealise other countries. It sounds like a cosmopolitan attitude, but it is the height of provincialism. The left is a repeat offender. The Sweden worship of the 1990s was rather gullible, but during the Angela Merkel era, Germany was the paradise of British and American progressives, who praised proportional representation over brute majoritarianism, industrial strategy over laissez-faire, soft power over Anglo-American militarism. Berlin itself – a more modern and less gilded city than London or New York – became a proof of concept.
Well, time has complicated the picture. Multiparty government, it seems, can breed indecision. Shaping the economy can mean backing existing industries rather than emerging ones. Soft power can be a euphemism for naivety in the face of mortal enemies. Having many beautiful cities but no megacities can mean giving up the economic benefits of agglomeration.
When two such different countries find themselves in such a similar situation at the same time, we should doubt that there is a “correct” model. What there are are trade-offs. Apart from the basics (property rights, tax collection, universal public services, etc.), almost no policy is absolutely good. Improving one thing tends to make another worse. Leadership is a matter of choosing which problems to tackle.
Germany’s decisions were not wrong. It is still richer than Britain. But if the costs and perverse outcomes were hard to foresee in Germany, imagine how much harder it would be from abroad. This is the inherent risk of worshipping foreign models. The UK and especially the US are determined to emulate the industrial strategy, but without the pedigree to do so or sufficient awareness of their uneven track record.
In the end, which of these two very different countries has more problems? In economic terms, it is Britain. Germany has less public debt. Its drive to produce fewer pieces of machinery and more advanced technologies is perfectly feasible over time. There is the cushion provided by the European single market.
However, from a political point of view, Germany… problem of extremism But the situation is worse. It has a Kremlin-loving far left, not just the most strident of Europe’s major far-right parties. And the advantage of Britain’s Napoleonic centralisation is a ruthless decision. A bad prime minister or two can (and did) ruin things. But a first-class one would get the country moving again.
For better or worse, France is Britain’s true twin: in per capita income, in maritime exposure, in being a unified state for so long, in accumulating so much in its capital, and in having lost a vast extra-European empire. A tale of two cities This is not about London and Munich. Even that Anglo-German point of contact, football, is a ridiculous disparity. Germany has four World Cups to England’s one. What is fascinating about this bilateral relationship lies in the (peaceful) contrast. How funny, then, that when the two sides finally come to something in common, it is national unrest.
Email Janan at janan.ganesh@ft.com
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