German growth forecast axed

The German government halved its growth forecast for the year showing that the European debt crisis is continuing to drag on Europe’s crucial powerhouse economy.

In an announcement on Tuesday, Berlin said it expects the economy to expand just 0.4pc during 2013 - a sharp revision from its expectation in October that Germany could achieve 1pc growth this year.

The revision brings Berlin’s economic expectations into line with those forecast by the Bundesbank, Germany’s central bank.

Philipp Roesler, Germany’s economy minister, said he was confident that economic growth would pick up pace during the year. He said he expects growth of 1.4pc during 2014.

Earlier this week, official data showed that Germany’s economy grew by 0.7pc in 2012. The figure was far below the crisis-defying achievement of 3pc which the German economy managed in 2011.