Business

Bail-out views: Portugal and Germany

  • 8 April 2011
  • From the section Business
Dinis Coelho Dordio
Dinis Coelho Dordio has had to make cutbacks in his business

The view from Dinis Coelho Dordio's farm must be one of the prettiest in the whole of Portugal.

From his Sintra farmhouse, you can see an ancient castle and a former royal palace perched at the top of wooded hills that start at the bottom of his land.

In the centre of the well-kept lawn is a huge white marquee capable of holding 300 guests. The family rents it out to couples to hold wedding receptions.

But the business has been hit by Portugal's austerity programme of spending cuts and tax rises as the government has battled to control its growing debt mountain.

"Today [the marquee] is a little too big. Nowadays it's not usually 300 guests. There are 200 maximum because we are in a crisis," he says.

The family business has had to lay off staff and is trying to diversify into catering.

But Dinis is worried things will get even worse if, as expected, an international bail-out means more belt-tightening.

"People are afraid because we don't know if we'll have social security, if we'll have money for pensions in a few years. So people are starting to really think whether they should or not spend money."

Jobs problem

An hour away by train is the centre of the capital Lisbon, where old, bright yellow trams trundle along cobbled streets.

The pavement cafes of the Chiado district have for more than a century been the place to discuss politics and philosophy.

Indeed a statue of the country's most famous writer, Fernando Pessoa, reclines at one of the tables.

Sipping an espresso nearby is 27-year-old Joao Gomes.

Since he graduated from university with a geography degree a few years ago, he's only been able to get temporary jobs - a huge problem for the nation's young.

But he doesn't think austerity - whether directed by the government or an EU-IMF bail-out - is the right prescription to get the economy back on its feet.

"I don't accept it. I think taxes are very high, they're too high," he says.

He fears a bail-out from Portugal's European Union partners will get the country into an even bigger financial mess.

"We should manage the problem ourselves and not ask for help from outside. We know that every cent we ask for, we'll have to pay back more in the future."

'Happy people'

Homens da Luta hope to restore national pride at this year's Eurovision song contest

The country's financial crisis is even the theme of Portugal's entry to the Eurovision song contest.

The ironically-titled "A Luta é Alegria" or "The Struggle is Joy" is sung by comedians-turned-singers Homens da Luta.

Lyricist Jel says the country's leaders and ordinary people are in complete disagreement on how to solve the country's financial troubles.

"The big majority of the politicians who rule us are asking people to make sacrifices. Young people with talent are leaving Portugal because they can't find jobs where they can progress."

So does he think he can restore some national pride when he and his group compete in Eurovision in Germany in mid-May, maybe even beating the countries paying for Portugal's bail-out?

"Our song doesn't speak badly of Germany or any other country," he says. "We go to Germany to show Europe that Portuguese people are not sad people. We are happy people who want to live with all our brothers in Europe."

Euro capital

A thousand miles away in Germany the brotherly European love is showing signs of strain.

Opinion polls have suggested about half of Germans don't want their country to hand over any more money to bail out indebted nations.

As Europe's richest country, Germany is the biggest guarantor of the massive programme to lend money to European states that run out of cash.

Frankfurt is the capital of the European monetary system, housing the European Central Bank, the guardian of the single currency.

The European Central Bank is highly visible in Frankfurt

Outside its headquarters is a huge bright yellow and blue sculpture in the shape of the euro currency's symbol.

Tourists get their photos taken beneath it. But the currency and all that goes with it has become a source of irritation for some in Frankfurt.

"German taxpayers are afraid of paying for other countries' debts," says Clemens Christmann from the Hess Industry Association, an organisation which represents mainly family-run businesses.

"I am quite sure that German taxpayers will not accept year by year higher spending for other European countries."

'More laws'

Germany's various layers of government are cutting their own levels of public spending as they try to balance their books.

Romerplatz, the Medieval square next to the River Main, has been the city's main meeting point for centuries.

People here disagree on whether Germany's multi-billion euro contributions to heavily-indebted nations should continue.

There has been a mixed reaction in Germany about the country's contribution to eurozone rescues

"We have to make more laws so countries in Europe which have difficulties don't need help from the other countries in Europe," says one local.

Her friend remembers fondly the days before the euro existed.

"The German mark was better. It was better when every country had its own currency."

But European solidarity has not entirely disappeared. The federal government's argument that Germany benefits from a strong euro clearly resonates with some.

"Germany has got very big advantages from the euro. They [countries in trouble] have to be supported. What else can we do? These countries would break down," says another resident.

Exporter benefits

In Frankfurt's oldest music shop, Cream Music, hundreds of classical and electric guitars hang on the walls.

Half of the shop's sales are to people outside of Germany.

Co-owner Bernie Hahn says his country's exporters will benefit from any bail-outs in the long run.

"If we haven't got strong neighbours, who will buy our products? So it's an investment in our own economy at the end of the day," he says.

But it's not just trade that motivates him - it is also a sense of being a European.

"It was part of the deal right from the beginning. Everybody knew we had to pay for it. We're the strongest economy in Europe so that's just the deal."