"What should David Cameron say first to Mrs Merkel?" asked the journalist.
"How did you manage all that growth?" was my reply. "Talk me though your mini jobs revolution".
Although Angela Merkel's visit to Downing Street has been overshadowed by discussions about an increase in the EU budget, our PM should also find time to ask Frau Merkel about Germany's labour market reform and supply side liberalisation.
Germany, despite having to comply with EU law, has liberalised the labour market through a "mini jobs" revolution. Folk can now take on part time work without having to pay the tax man much of what they earn, and without having to comply with endless labour law.
So guess what? Not taxing and regulating work means that there is an awful lot more work in Germany than before.
Even more importantly, while non-wage labour costs in the UK are rising, in Germany they are not. In other words, Germany is becoming relatively more competitive globally than we are.
Having our own currency is a good thing. Being able to devalue has been essential. But it should never become a substitute for making the kinds of reforms that we will need to prosper in future.
Our chancellor could learn much from the German Chancellor.blog comments powered by Disqus
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