"Whisper it softly ... Germany is coming back"

That managerial confidence is inspired by politicians who now seem capable of making decisions. After 13 years of public argument Berlin is going ahead with a new airport capable of handling 20 million passengers a year, to compete with Heathrow and Schiphol. The long overdue move will transform the role of the German capital in Central Europe. That demonstrates a commitment to the future that has been lacking since the early days of German unification.



The raw economic figures are good. Germany is still the world's top exporter, GDP growth is up and could reach 2 per cent, inflation is dipping below 2 per cent. The IFO business confidence index is at its highest since 1991. Consumer spending is up. It is a dramatically different picture from Italy and France.

But the real alchemy of the brief Merkel era is in the use of the negative figures. The five million unemployed leeched blood from the dying Government of Herr Schröder. For Frau Merkel, they have become the ultimate cosh with which to beat the unions. Despite a flutter of resistance, the unions have been marginalised.

Corporate Germany has been changing faster than the rest of the country. It is now enough for a company to threaten to move a factory to Poland for German workers to abandon a wage dispute. As a result, the unions have become pussy cats. The average number of days lost annually through strikes (nine days per 1,000 workers) is significantly lower than in France (129) or Italy (82).

Productivity is up and the work ethic is back. "We're like the English now," says Frau Lindner. "We work hard and we play hard." She is planning two further holidays this year: one to France and one to America.

And no wonder: the money is suddenly there. Average senior managerial salaries are now €251,000 (about £176,000), just behind Britain and well ahead of France (€116,000).

It is this rapidly evolving attitude to work that is sowing optimism. Around 1.7 million Germans have taken second jobs earning up to £275 a month on top of their full-time salary, typically as office cleaners or as freelance events organisers. More and more companies hire people on fixed-term contracts. As a result, trade unions have lost their ability to dictate wages, says Peter Schnur, of the IAB labour market monitoring unit.

The effect is liberating. Since leaving school, 22-year-old Nicolas Ceder has already set up internet cafés, helped to open a bar and published a free magazine. He is now importing Swedish stretch benches to help Germans with back problems. "You do meet people now who are willing to take risks," he says. "And though the reforms may be small they are forcing people to push themselves harder to get employed. That makes a big difference to the national mood."

A journalist friend has helped to launch two magazines in the past three years, Cicero, a political journal, and a lifestyle glossy, Park Avenue. Both are doing well. Now he is working on a third. That would have been unthinkable five years ago. Advertising budgets are flush and publishers are willing to take risks.

Optimism, the essential component of a rebound, is almost impossible to measure. But chocolate sales have hit record highs and property prices are picking up in key cities and beauty spots. Holidaying at home used to be a sign of poverty. Now Germany is the German's top tourist destination.

In the 1960s in the midst of the first Economic Miracle, Germans could not wait to pack their Volkswagen Beetles and drive to Lake Como. Now Italy seems less attractive than staying at home.

Economists and psychologists call this the Merkel Miracle. It stops some way short of the Blairite revolution unleashed in 1997: people still are fearful and there are still a great many obstacles to change. But something has changed in the relationship between state and individual; personal initiative is being rewarded and that is boosting spirits. Unlike France, a majority of the nation no longer wants a career in the civil service.

"This is Germany's chance," says Christoph Schlitz, of Die Welt. "Who else is there to lead Europe but us? The British Government is in a state of permanent agony, the French are blocking themselves and the Italians look wobbly."




Germany by numbers

82 million population

£17,000 GDP per capita


£850,000 billion subsidy from West to East Germany since unification


300 pints of beer drunk per person per year, more than any other country

25kg of sausages eaten annually per person, about a quarter of a pig

3rd largest economy in the world after US and Japan

11.6 per cent unemployment

5,000 neo-Nazis paraded in Dresden last year on anniversary of Allied bombing

2.4 per cent of population is of Turkish origin

3.7 per cent of population is Muslim