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Last Updated: Thursday, 15 May, 2003, 13:44 GMT 14:44 UK
German sympathy for UK doubts

By Ray Furlong
BBC Berlin correspondent

Germany has been watching the British debate over the euro with keen interest.

And whatever Gordon Brown will announce on the 9 June, Nikolaus Gruchot for one is in no doubt about the benefits of the single currency.

"The euro has made life so much easier in business. I can't even begin to tell you," he enthuses.

Gruchot's business, which sells underwater equipment, is currently moving in order to triple its office space.

He says his exports to other eurozone countries have doubled since the single currency was brought in.

"Actually I don't think we can call this process export any more, because shipping to these countries from the business side is as easy as shipping to Germany."

VIEW FROM THE EUROZONE

Analyst Stephan Schneider of Deutsche Bank shares Gruchot's enthusiasm.

He says exchange rate stability is the biggest boon of the euro - protecting Germany from currency crises.

"In the old days if there was a large movement in the dollar/deutschmark exchange rate we usually saw huge Lira devaluations which obviously hit many German exporters."

Actually, the euro is something a double-edged sword for Germany's exporters.

Unemployed

On the one hand, the current strength of the currency is hurting their sales outside the eurozone.

On the other hand, the increased levels of trade that Germany has enjoyed with other eurozone countries is one of the few bright spots on its otherwise bleak economic outlook.

With more than 4.5 million people unemployed, almost zero growth and a yawning budget deficit, many people say the euro has only deepened this country's economic problems.

Constrained by the Stability Pact, which puts limits on public debt, Germany has had to cut spending at a time when belts were already painfully tightened.

It is also unable to lower interest rates, and some have warned of a deflationary crisis.

Expensive drinks?

There's also the psychological factor. Most Germans have not forgotten the price increases by retailers that followed the euro's launch and earned it the 'Teuro' sobriquet.

On central Berlin's restaurant-lined Oranienburger Strasse, a straw poll among café-goers brought a familiar refrain.

"If I go to a restaurant to eat something or drink something, it is much more expensive since the euro came in - and these are points where I can feel it," complained one man.

"Everything you buy is more expensive," said another, sipping a Latte Macchiato that, he said, would have cost half as much before.

For the people here, Britain's reluctance to sign up for the euro is quite understandable.

No meddling

German politicians would like Britain to join, although they have not said so publicly - that would be meddling.

They see British entry as giving the euro a more solid footing, broadening its base and expanding the Eurozone.

But Stephan Schneider believes there's actually a lot of sympathy for Britain's anguished debate.

"After all, Germany would probably not have joined the euro if it had held a referendum.

"But here, the decision was taken by the politicians," he says. "Also, it was a political decision - not an economic one."




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