Anti-austerity movement gains confidence as largest economy suffers from falling industrial output and geopolitical crises
Germany has slashed its growth forecasts for this year and 2015, sparking calls for a public spending boost to prevent the eurozone falling into a triple-dip recession.
Berlin now expects growth of just 1.2% this year and the same in 2015, it said on Tuesday, down from 1.8% and 2%, in the face of slowing export growth.
It came as official Eurostat figures showed that industrial production across the eurozone slumped in August by an alarming 1.8% month-on-month, meaning it was 1.9% lower than a year ago.
With reports mounting of slowing industrial output in Germany and declining business confidence, the eurozone’s largest economy is now expected to expand at less than half the pace of the UK and US over the next year.
The economy minister, Sigmar Gabriel, blamed geopolitical tensions and global economic problems overseas. He said: “The German economy is steering through rough foreign waters. Geopolitical crises have also increased uncertainty in Germany and moderate growth is weighing on the German economy.”
Across the eurozone business optimism in the last three months fell from net 35% to just 5%, according to Grant Thornton’s International Business Report, dragged down by a dramatic fall in German optimism, which plummeted from a net 79% to 36% over the period.
Germany’s economy has grown consistently in recent years, giving Berlin added authority in debates over EU-imposed constraints on sovereign budgets. The finance minister, Wolfgang Schäuble, has consistently campaigned for Paris and Rome to be locked into strict budget rules.
But amid signs that the German economy is also stalling, the anti-austerity movement is gaining confidence.
Last week France’s new economy minister, Emmanuel Macron, called for a eurozone-wide €300bn (£240bn) spending boost, while the Italian prime minister, Matteo Renzi, has stepped up pressure on Brussels to adopt looser spending rules to spur investment and growth.
Their campaign has been bolstered by surveys showing Berlin’s woes may be more deep-seated.
Full article: Fears of triple-dip eurozone recession as Germany cuts growth forecasts (The Guaridan)