While Chancellor Angela Merkel’s focus on careful spending as a cure for the euro zone’s debt problems has made her popular at home, German consumers are borrowing more to finance everything from furniture to cars.
Germans, traditionally a nation of debt-averse savers, took out an average of 8,700 euros ($9,650) in loans last year – a rise of around 10 percent compared with 2013, according to Schufa, Germany’s main credit bureau.
With borrowing expected rise again this year, that marks a significant shift in a country where the thrifty southwestern ‘Swabian housewife’ has been held up as a model and a strong dislike of borrowing is rooted in the language. ‘Schuld’, the word for debt, also means guilt.
During the euro zone crisis, Merkel and her government have extolled the virtues of budget discipline over loading up on debt to finance stimulus, with her Finance Minister Wolfgang Schaeuble currently playing hardball over Greece’s attempts to secure a third bailout in exchange for economic reforms.