Germany sells more stuff abroad than any other country but even the biggest Germanophile would admit that comedy and music are not its top exports. To determine if this stereotype is still fair, I looked for some top German pop tunes to listen to this weekend whilst awaiting the country’s election result.

Nena and her red balloons (all 99 of them) makes the list as she always does. But sadly this fact reinforces the stereotype that Germany is rubbish at pop music because the song is 30 years old. And the other big German pop player – Kraftwerk – wrote the brilliant The Model even earlier in 1978

But for something a little more up to date (although not to my taste), the East German rock group Rammstein has recorded Sonne to delight your ears.

But unlike all the above tunes the German election campaign has so far proved to be a little dull. Either a new grand coalition or the current coalition is expected to be (re) formed, with Angela Merkel remaining as Chancellor. Much is being made of the euro-critical party the AfD, but I think that is more to make a boring election interesting rather than the emergence of a significant euro protest vote.

But what about German business? How does it regard the election? Alexander Schumann is Chief Economist at the German Chambers of Industry and Commerce and was interviewed on Bloomberg TV on Friday. He wants any new government to focus on safeguarding and improving business competitiveness. He stressed that the last four years have been all about dealing with the euro crisis, but German politicians now need to focus back on the country’s economic success. In particular there are two threats according to Mr Schumann, high energy prices thanks to the reversal of nuclear power and an overly complex and uncompetitive tax system. Interestingly he did not think that labour law was a major problem or the threat of a nationwide minimum wage.

So the warning from business to the new government is to not take for granted Germany’s long term corporate success as reform is still needed. However the German economy is accelerating already, GDP forecasts are being raised and there is evidence of a domestic consumption recovery too. The country should also benefit from a recovering Europe as Germany exports 55% to the EU. In this environment, the resultant coalition can probably leave business to take care of itself (although energy reform could prove politically problematic).

A stronger domestic economy will also give Merkel, if she wins, the time and more importantly the money to concentrate on continued efforts to resolve the eurozone’s problems. And there is already a long to do list with further bailouts, cash or credit probably required for Ireland, Portugal and Greece. There may be an air of complacency from the markets but there is still a lot to do in restructuring the euro bloc to enable its continued existence, not least the formidable task that is banking union. Better domestic growth gives German leaders the space to do this.

So what do the markets think? Not surprisingly equities are pricing in some uncertainty around the election. The German DAX index is lagging the CAC for the first time in years. In the last two months, the DAX is up around 12% but over the same time period, the CAC is up 16%.

During the dark days of the crisis, German equities and bonds were viewed as safe havens. As the eurozone recovery takes hold, investors are looking at the recovery plays in the high beta financials and periphery markets. But the DAX should also be a strong recovery play according to UBS research as it is a highly cyclical market with plenty of capital goods companies. The message from UBS is that no matter what the election result, no matter who is in the driving seat, “Germany’s recovery should not be disrupted”. A recovery no matter who’s in charge suggests that the election is irrelevant economically to Germany.

And yet who leads Germany is deemed crucial to the future of the European Union – the world’s largest trading bloc and home to half a billion people. Germany is Europe’s largest and wealthiest country and as so dominates policy. “He, who pays the piper, calls the tune”.

It was Merkel’s choice to keep Greece in the euro that was the biggest decision she’s made. Her determination to keep the currency bloc together has resulted in all the other big developments: allowing Greece to write off its debt; support for troubled countries through the ECB; support for troubled banks both through the ECB and ESM. All directly result from Merkel’s commitment to the euro. The German people may have grumbled but they have generally supported her policies.

And what about the future? Will Germany be required to make that euro commitment again? Probably not to the same extent. Many of the programmes that enable the future survival of the euro bloc are very slowly being put in place. It is now becoming more of an administrative task list rather than requiring grand German gestures.

The collaborative system of German politics also ensures that it is unlikely that Germany will now change course on Europe. The big decision has been made – keep the euro together – and it was largely welcomed by the Germans. And so expect little change to Merkel’s carrot and stick approach to ensuring her will gets done. For example, Greece needs to reach certain milestones like achieving a primary budget surplus (which it has), before it can get more cash. Her step by step slow pace of change may infuriate the markets but is likely to continue – it is the nature of German coalition consensual politics.

German business may want the re-elected Merkel to focus back on her country’s own economic needs, but the domestic recovery will give her a little breathing space. Although energy reform is right at the top of her to do list. The EZ will continue to grab lot of her time, although less than at the height of the crisis.

Merkel is highly likely to be re-elected Chancellor in some form of coalition on Sunday. Germany’s recovery is likely to continue whoever is in charge. That rebound will give the new government some breathing room to continue sorting out the EZ. The German election result is important for the currency bloc, but the big decision has already been taken – Merkel’s commitment to keep it together. What is now important is to keep the reform and legislative process on track. And Germany is supposed to be good at such administrative tasks.

German comedy

Organizational excellence aside, a German export is breaking one national stereotype. Henning Wehn is the “German Comedy ambassador in London” and is making a career of being a German comedian in the UK. At one show in Essex, he turned up to find the audience wearing Hitler moustaches,( but I think that says more about the British than it does about Germans).

And for a final German musical flourish, I offer you StroboPop

http://youtu.be/-u0qqmuCv2o

Extraordinarily almost 20 million have listened to it on youtube…