Is France richer than Germany

Comparison of wealth and income in France and Germany

Upside down world: In Germany, which in times of crisis presents itself as a model of sensible economic activity, the average wealth of citizens is well below that of the French. Germans have a higher income.

The latest wealth ranking in Credit Suisse's Global Wealth Report confirmed once again in October 2017: the average French are wealthier than the average German. According to this, the average adult wealth (cash, securities, real estate) in France is 263 399 dollars, in Germany only 203 946. The difference in the median wealth is even more pronounced in France's favor: in France it is 119 720 dollars, in Germany against it $ 47 091. For Germans, this means that half of the households have assets of less than $ 47,091, the other half more.

Compared to the French, the Germans are relatively poor. According to experts, the above-average discrepancy between average and median wealth indicates that wealth is very unevenly distributed. Indicators like the Gini coefficient seem to confirm this: it is higher in Germany than in France, which means more inequality. So are the Germans not only poorer, but also live in a society with greater inequality?

The statistics of statisticians have repeatedly been interpreted and put into perspective. Reference was made to the smaller household sizes and the above-average proportion of tenants in Germany. Even the claims from the pension insurance - not to be despised in France either - were used to explain why the Germans accumulate less wealth. But the results remain practically unchanged even if these special features are taken into account.

This situation seems all the more astonishing as a comparison of the incomes of Germans and French reveals a completely different picture: Both the mean and median incomes are higher in Germany - between 10% and 20% - and they are also somewhat more evenly distributed than in France . This begs the question: What will happen to these higher incomes if they do not generate higher wealth?

To do this, it is important to understand how wealth is built up in both countries. In France, financial assets, i.e. cash, stocks and shares, make up a somewhat smaller proportion of assets, but more is invested in real estate. Fired by tax incentives and higher property prices, investing in this sector is a real national sport. In Germany, on the other hand, there is significantly less investment in real estate, but more in tangible or business assets. This is a direct consequence of the high proportion of successful medium-sized family businesses that have been run for several generations. The assets are here in the company. The euro crisis has impressively shown that this also entails dangers: claims against customers in financially weak countries can be canceled in the event of a crisis.

German private individuals, banks and companies have always had numerous assets abroad. In recent years, however, this item has skyrocketed - partly as a result of monetary union. In 2017, Germans held 1,771 billion euros in net assets abroad - this corresponds to 41% of the annual German economic output.

German investment behavior has proven to be problematic when it comes to wealth accumulation: German savers either have a penchant for cash and still pay into savings accounts with minimal interest rates - or they rely on highly risky investments abroad. A fatal mixture, both for private investors and for professional investors: This is how the breathtaking losses of the German Landesbanken in the financial crisis occurred.

The German Institute for Economic Research has estimated the wealth losses suffered abroad between 2006 and 2012 at around 600 billion euros. On the left of the Rhine, people have been more pragmatic in recent years: investments in profitable real estate and life insurances, which in France are nothing more than savings plans with insurance cover - the interest rate of the Livret A is always set well above the market rate by the French Ministry of Economic Affairs - outpaced German investment behavior . Since 2000, the average wealth of the French has almost tripled, while in Germany it has only doubled.

Of course, all of this primarily affects the middle and higher income brackets. But here, too, the numbers speak a clear language: Credit Suisse has 2.2 million millionaires in France and 1.7 million on the right bank of the Rhine. So there are more rich people in France. How can this be reconciled with greater inequality in the distribution of wealth in Germany? This can be explained by the higher number of ultra-rich people in Germany. Credit Suisse counts 131 people in the asset category of $ 500 million or more in Germany, but only 56 in France. Some of their assets are so high that they distort the entire statistics. If these mostly very withdrawn people are excluded, the distribution of wealth in Germany is almost comparable to that in Scandinavian countries. As far as income inequality is concerned, the fruits of the upswing can be clearly seen here: As the OCDE figures show, the gap in Germany has been less wide since 2007, but it is opening in France.

TEXT: MARKUS GABEL