Giant posters have appeared this week at Bank tube station featuring supermodel Claudia Schiffer draped in only a German flag. Designed to cash in on World Cup fever and emblazoned with saucy slogans, such as “Want to get down to business?”, they are part of a campaign to persuade people to invest in Germany.
Using Schiffer is a shrewd move. With her shaved armpits and global appeal, she’s a world away from the usual Teutonic stereotypes. Still, for my money, they’ve got the wrong woman. Okay, there’s no way Angela Merkel can compete with Schiffer on looks. But Germany’s new-ish chancellor is shaping up to be a remarkable figure and potentially the most significant European leader since Margaret Thatcher.
Many people underestimated this former East German housewife when she emerged to head an uneasy coalition with her principal opponents after last year’s scrappy election. But she’s stuck doggedly to her reform agenda, been a powerful advocate of free markets in Europe and has been rewarded with a booming stockmarket and an economy that could grow faster than the UK this year.
We’ve been here before, of course. When Germany beat England in the last match at the old Wembley stadium in 2000, there were plenty of commentators suggesting Germany was about to emerge from the trauma of reunification and that Frankfurt would become a rival to London. That proved about as accurate as the England strikers that night. A new trauma, euro entry, set Germany’s recovery back six more years.
But this time, Germany’s renaissance looks real. Corporate taxes have been cut and wages haven’t risen for years. Germans no longer waffle about the Rhineland model, but talk the language of shareholder value. Sprawling conglomerates such as Siemens, BASF and ThyssenKrupp are restructuring. Even the Mittelstand – medium-sized family businesses that form the backbone of the economy – are abandoning their relationships with state-owned banks and adapting to the disciplines of the markets.
True, Merkel’s only been in office seven months, so it would be stretching the point to give her all the credit for Germany’s recovery. But investors
know a good thing when they see it. Claudia Schiffer can lie around Bank station, draped in her flag. But the smart money, in the form of private equity and hedge funds, is over there already, lured by Merkel, the poster-girl for the financial markets.
Brown’s double standards on Gazprom Centrica bid
On the day that Ferrovial announced its takeover of BAA, Gordon Brown delivered a sermon to the rest of Europe on protectionism, attacking the “economic nationalism” that has taken root on much of the continent. It was good timing, reminding the world that Britain is proud of its open markets. But then he blew it with a bizarre statement that he might block a Russian takeover of Centrica, Britain’s leading gas supplier.
Why the double standards? Gazprom, the Russian gas giant, is clearly interested in Centrica. It said as much again this week. And a tie-up could make sense for both sides. Centrica desperately needs access to new gas supplies, now that its Morecambe Bay gas field is running dry. And Gazprom needs access to retail customers if it is to fulfil its ambition of becoming a fully integrated energy supplier like Shell or BP.
Yet Brown claims a Gazprom bid for Centrica would be treated as a political move. That puts him at odds with Tony Blair, who says there is no reason to block a bid. It also puts him at odds with the facts of commercial life. British Gas – Centrica’s retail arm – operates in a competitive market. It’s hard to see Gazprom, having shelled out billions to buy Centrica, wanting to stop supplying gas to its own customers. But even if it did, those customers would be free to switch suppliers.
Brown seems to have confused several issues. There are real problems with Russian interference in the energy sector. That’s why investors should be wary of companies such as Rosneft, the oil giant due to float on the Stock Exchange in July. There’s also a legitimate debate over energy security, given Europe will soon rely on Russia for 30% of its gas supplies. But this has nothing to do with the ownership of Centrica. Indeed, the biggest risk to our energy security is that Russia decides to sell its gas elsewhere. That’s what will happen if Brown’s scare-mongering is allowed to prevail.
Simon Nixon is executive editor of Breakingviews.com