Leading article: How to weather the financial storms

The economic news around much of the rich world is causing policymakers sleepless nights, but there was at least one source of optimism out there yesterday. According to Germany's Federal Statistics Office, the eurozone's largest economy is growing at its fastest rate since 1996. German gross national product expanded by 1.5 per cent in the first three months of this year – double the predictions of many analysts.

So why is Germany bucking the miserable trend? The country seems to be benefiting from labour market reforms of recent years and a resurgence of exports. Unemployment has fallen and consumer demand has risen. Analysts are also arguing that the milder weather in January and February boosted the domestic construction industry.

We must not get carried away. Schadenfreude in Berlin at the calamity that has befallen the "Anglo-Saxon" economies would be a most inappropriate reaction. German investment banks have lost a lot of money in the financial meltdown, thanks to their foolish investments in US sub-prime mortgage packages. And even after the necessary recalculations are made in the light of this surge in output, German growth is still projected to be lower in 2008 than it was in 2007. The credit crunch and higher commodity prices will see to that. Moreover, the country is particularly vulnerable to a decline in demand for German products in the US. And the rising value of the euro will act to depress exports.

But, nevertheless, Germany does seem to be proving rather more resilient in the face of these malign economic forces than many other European countries, notably Britain. And these latest figures should give us pause to consider the merits of a balanced economy. One of the conventional wisdoms that has been challenged by the credit crisis is the strategic emphasis we in the UK have put on financial services. The sector now accounts for almost 10 per cent of output. That was beneficial in the credit boom. But we are feeling the painful consequences in the present bust.

There is a broader point here. As the Governor of the Bank of England, Mervyn King, noted recently, it is worrying that all our best graduates flock into the City, rather than other career paths. The German state education system has traditionally counterbalanced the lure of finance by placing a strong emphasis on technical training and apprenticeships. We, on the other hand, have been content to let raw market forces decide career options.

Winston Churchill remarked that he would rather see finance less proud and industry more content. That would seem a sensible prescription for the British economy once the worst of this crisis is out of the way.