Die Welt has Or if you prefer the original in the tabloid Bild:

Finance Minister, Schäuble, believes that the Euro-crisis will recede in 2013. The situation is better than presumed. Countries like Greece and France knew they would have to make reforms.

Wolfgang Schäuble

Foto: dpa Bundesfinanzminister Wolfgang Schäuble (CDU) thinks that the EU is over the worst.

German Finance Minister, Wolfgang Schäuble (CDU), appears optimistic that the Euro-crisis will recede in the coming year: “I think we have the worst behind us”, Schäuble told “Bild”-Zeitung. Countries like Greece have in the mean time recognised that the crisis can only be mastered  through tough reforms.

Schäuble sounded optimistic about the reform efforts in France. Also that government knows “very precisely that each country must carry out continuous reforms to remain competitive”.

The Finance Minister also turned against the fear that 2013 could usher in an economic stagnation. “The situation is better than we thought because business with the USA and Asia is pulling stronger”, is Schäubles reason for optimism in this area. The German economy would in spite of continued difficult external conditions “grow healthily in the coming year”.

No Savings packet

The Minister did however warn against too noticeable pay raises in Germany: “I think moderate pay raises are possible, but one should in economically disturbed times keep within limits and not exaggerate.”

Schäuble again refuted rumours that he plans for savings. He had immediately disavowed them. What is correct however is that the Federal Government “before the 2013 election will present a structurally balanced budget draft proposal”.



It is not necessarily a ‘pie in the sky’ optimism, as the German industry has a strong construction export and Schäuble will know what orders are in, including those with long lead times. This is important because there is a high import content in German production for domestic use and export.

I wondered why Russia wasn’t mentioned, as they have a massive need for infrastructural programmes. On the other hand the Vodka-tax will increase by 1/3 in 2013.

60% of Russia’s tax-revenue is oil export tariffs, this is a huge increase (a bit over 1% of tax revenue is alcohol tax). This does point to a severe budget problem in Russia – that might stay orders.

Schäuble’s call for moderation (in a country where a spending spree is two lumps of sugar in your coffee instead of one) is usual; but significant is that in the original Bild interview:

The hidden raising of taxes with due to progression in the tax scale was stopped in the Bundesrat (as it is fiscal, it does need the Bundesrat’s approval and the opposition has majority in the Bundesrat) by the opposition. Which is a tax cut for low income wage earners. So moderate pay raises (in real terms) plus a moderate tax reduction should mean some stimulus to consumption.

That Germany isn’t going overboard in a Keynesian spending boost does not mean that the effect is neither unknown nor unappreciated; in moderation. The trick is that wages and salaries in Germany should appreciate the German economy and similarly depreciate the other EU members, as with the Euro a currency adjustment is not possible.

The tenor of the message is reflected not only in the French president Hollande’s deeds (if not words), but the Danish PM will in her new year’s speech announce continued reforms (that will not go down well with the extreme left that supports the government).

Finally the reference to France does lend credibility to the rumour quoted in El País, that large sum in ECB is reserved for a recapitalization of the French banks.

Crisis management is a learning process:

Greece taught that non audited figures are probably forged.

Italy taught the emptiness of political promises.

Spain taught that aid should be covered with liability.

Now France must have (at least the main part) of the economic reforms in place before the financial sector can be tackled. That is probably why the Danish PM will continue the unpopular streak – the Danish real estate mortgage does need help.