Is Germany Really One of the Poorest Nations in the Euro Zone?

By Stephen Fuchs on Email @StephenWFuchs


There has been some debate in recent days around a new study released by the European Central Bank (ECB) that looks at the household income of each euro zone country.  As soon as the numbers came out, the mainstream media was quick to point out that Germany and the other northern nations are among the poorest while the southern countries have the highest household wealth.  On the surface, the  ECB numbers do show that, but is it a true representation of the wealth?  Is Germany bailing out the richest countries in Europe?

An independent financial website, Wall Street Pit, took an extensive look at the results of the ECB study and found that the press is only telling one part of the story.  The first red flag was the enormous difference in the net wealth of median households among the euro zone countries.  According to the ECB chart, households in Spain and Italy appear to be almost four times as wealthy as Germany and the Greeks two times as wealthy.  If one was to go off of this chart alone, it would make the Germans look like fools for bailing out these wealthy nations.

Figure 1. Net wealth of median households (1000€) []

Figure 1. Net wealth of median households (1000€) []

Another ECB chart, which was ignored for the most part by the media, looked at the mean household wealth numbers.  Unlike the statistics shown in the median chart, Germany falls closer to the middle in the mean wealth.  If you’re feeling a little confused right now, hang in there… What this means (no pun intended) is that there is a large gap in the distribution of wealth in Germany and as a result these numbers portray confusing results.

Figure 2. Mean household net wealth (1000€) []

Figure 2. Mean household net wealth (1000€) []

Wall Street Pit provides a wealth of information on how these two statistics go together to prove the misleading statements made by the press, and the end result shows that Germany is in fact significantly richer than the southern countries.  The problem is that the wealth in Germany is mainly concentrated in the upper income households which happens to be a very small percentage of the population.  As a result, every time Germany bails out one of the weaker European countries, the majority of German citizens are negatively affected which creates the tension among the less wealthy Germans.

Figure 3.  Mean/Median []

Figure 3. Mean/Median []

Sources: Wall Street Pit, Wall Street Journal, Financial Times
Photo based off work by sufinawaz via stock.xchng 

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Stephen Fuchs
Stephen founded German Pulse and LGBT Germany out of a passion to introduce Americans to a Germany that goes beyond beer and polka (although with enough beer he has been known to polka it up a bit). He's a coffee addict, lover of wine and good times, a hit in the kitchen and editor of TV commercials. You can follow him on Twitter (@StephenWFuchs) to find out a lot more.
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