Contracting Germany Set On Recession Course

This morning saw the publication of dire statistics for the German economy, which contracted this quarter with many voices now predicting that the struggling country is likely on course for recession. Now it’s not just the German Chancellor that’s looking shaky…

Unlike the UK’s contraction this quarter, the German one is based on much less sound fundamentals.  Overall year on year, the German economy’s growth rate is just 0.4% compared to the UK’s 1.2%. The Chief Business Editor of respected German broadsheet Welt has said that Germany has become “the sick man of Europe”.

GDP has now fallen in two of the last four quarters in both Germany and Italy. The last thing European countries want right now is a disorderly No Deal exit for Britain from the EU…

mdi-timer 14th August 2019 @ 3:15 pm 14th Aug 2019 @ 3:15 pm mdi-comment Comments
German Manufacturing ‘Free Falls’ to Worst Level in 7 Years

Germany’s manufacturing woes just get worse and worse, German executives are describing their sector as in “free fall” while one German analyst has said the economy is “in a grey area between a marked growth slowdown and a recession”. The latest German manufacturing PMI index has slumped again to 43.1, significantly lower than expectations and its worst level since 2012. It has been in contraction territory all year…

Luckily for Germany, there’s a large and dynamic world economy just on its doorstep which it will soon have the opportunity to sign a comprehensive free trade deal with. That’ll be a nice confidence boost for the struggling German economy…

mdi-timer 25th July 2019 @ 4:51 pm 25th Jul 2019 @ 4:51 pm mdi-comment Comments
Eurozone Industrial Production Slumps Second Month in a Row

Three smug eurocrats have been gloating about Brexit and the Tory leadership race in a Sky News segment which Sky have inexplicably been playing on repeat all day. Not exactly news.

They won’t be as smug when they see the latest Eurozone industrial figures. Industrial production fell 0.5% in April on top of a 0.4% drop in March. Dragging every other country down was Germany which saw its industrial production plummet by 2.3% – almost five times faster than the Eurozone as a whole. Brussels’ Brexit bluster is going to start looking pretty hollow if the Eurozone’s economic woes keep getting worse like this…

mdi-timer 13th June 2019 @ 4:39 pm 13th Jun 2019 @ 4:39 pm mdi-comment Comments
Merkel Cancels Resignation, Decides Successor Not Up to Job

If the Tories thought they were having trouble getting rid of Theresa May, they should spare a thought for the German CDU where Angela Merkel has just announced that she won’t be resigning as German Chancellor after all. Heiliger Strohsack!

Merkel has reportedly decided that her chosen successor Annegret Kramp-Karrenbauer, abbreviated to slightly dubious acronym ‘AKK’, is not up to the job after watching her popularity slide since she took over leadership of the CDU. AKK led the CDU to its worst ever performance in the EU elections, which people actually care about in Germany. Merkel now wants to hang on at least until 2021. As long as Theresa May doesn’t get any ideas…

mdi-timer 28th May 2019 @ 12:31 pm 28th May 2019 @ 12:31 pm mdi-comment Comments
German Growth Forecast Slashed by Over 75%

The German Government has released an updated growth forecast for 2019, and it’s pretty damning. Forecast growth for 2019 has been slashed to 0.5%, less than a quarter of the 2.1% predicted a year ago and a level not seen since the height of the Eurozone crisis. It’s also less than half of the UK’s expected growth this year. While Remainer commentators drone on about the UK, the EU’s powerhouse economy is barely keeping its head above water…

mdi-timer 17th April 2019 @ 4:36 pm 17th Apr 2019 @ 4:36 pm mdi-comment Comments
German Economists: No Deal Will Hit Ireland Three Times Harder than UK

Germany’s prestigious IFO Institut has crunched the numbers on the economic impact of no deal on 44 countries and predicted that Ireland would be hit three times harder than the UK by a no-deal Brexit, taking a massive 8.16% hit to their economy. Guido hears that Ireland has been the main EU27 country holding out against any reference to the UK’s basic Vienna Convention treaty rights over the backstop. They may want to seriously reconsider their position after seeing these figures…

However, the Institut also modelled the effect of a “hard but smart” Brexit, where the UK left with no deal but also put in place large unilateral tariff cuts, more or less exactly along the lines of what what the Government is planning. In this scenario, the UK actually faces a smaller impact than the EU – they forecast a -0.5% impact on the UK compared to -0.4% for France and -0.48% for Germany, and -0.6% for the EU as a whole. Ireland is still by far the biggest loser, taking a -5.39% hit, ten times the size of the UK…

In their sector-by-sector breakdown, they find that the UK would actually receive a major boost to certain sectors in a “hard but smart” Brexit, with electrical equipment up by 3.7%, machine manufacturing by 8.4% and pharmaceuticals by a whole 8.7%. EU sectors lose out across the board…

Gabriel Felbermayr, the author of the report and also President of the Kiel Institute for the World Economy, said that the EU needed to “urgently ponder whether the danger of a hard Brexit isn’t bigger than initially assumed” and called on the EU to offer to remove the backstop “as a quick fix at least”. Brussels and Dublin can only keep sticking their fingers in their ears for so long…

H/t Pieter Cleppe

mdi-timer 6th March 2019 @ 2:57 pm 6th Mar 2019 @ 2:57 pm mdi-comment Comments
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