THE German economy has narrowly avoided falling into recession, but remains “very weak” according to experts. This week it emerged that the UK economy, after shrinking in the second quarter, had anaemic growth of 0.3% in the third. That was about the worst performance for a decade as Brexit woes bit. But the UK is still doing better than Germany, which reported today that the economy grew by just 0.1% in the third quarter.
While that defied expectations that the EU’s biggest economy would fall into recession, it was hardly regarded as good news for the ailing eurozone. Claus Vistesen, chief eurozone economist at Pantheon Macroeconomics, said that while there is no technical recession, Germany is “most definitely a very weak economy”.
Germany’s powerhouse manufacturing sector, in particular its car industry, is being biffed by weaker foreign demand and tariff disputes between America and China. Economy minister Peter Altmaier said: “We do not have a technical recession, but the growth numbers are still too weak.”
The scope of the problems facing Germany was highlighted by news that Mercedes-Benz plans to axe 1000 jobs in a bid to cut €1 billion from its wage bill by 2022. It plans to slash investment in its car plants.
The German government, led by Angela Merkel, is under pressure to ditch its balanced budget policy and borrow to boost the economy. Overnight, there was also weak economic data from China, increasing talk of a global slowdown. Chinese retail sales fell to a 16-year low, while industrial production rose by only 4.7%, well below forecasts