Germany recession panic as economy in RED – £69billion overdrawn in one year
Brexit: Angela Merkel labelled a 'heroine' by Jackson
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Federal, state and local authorities have spent far more than they received as the government released billions of pounds to prop up the battered economy. The country’s Federal Statistical Office – its equivalent of the Office for National Statistics (ONS) – released the worrying figures this morning.
They also revealed that in relation to total economic output, the deficit was 4.7 percent.
The figure was the second largest in the first half of a year since German reunification in 1990 following the fall of the Berlin Wall.
It was also significantly higher than the £40billion deficit Germany ran in the first half of 2020 – which covered the first lockdown.
Its worrying performance comes despite Brexit naysayers repeatedly claiming that the UK would be the one to suffer rather than their beloved EU.
In reality the opposite is true – as the UK continues to bounce out of the Covid-induced contraction to prove that Global Britain does indeed have a bright future.
Speaking earlier this month, Sam Fuller, director of Financial Markets Online, said: “The pace of the UK’s vaccination programme – which has successfully delivered two Covid jabs into the arms of 75 percent of the adult population – is an important factor and may explain why UK growth has soared to treble that of Germany and four times that of its European neighbour France.”
All this has helped the UK rebound, while Angela Merkle’s country still seems to be stuck in a Covid quagmire it is unable to shake.
And with the long-standing Chancellor preparing to step down after 16 years next month further uncertainty could cause more damage.
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Her likely successor, Armin Laschet, will have to deliver on his bold promises of ushering Germany and the EU into a new era – without the economic might of the UK.
And while Covid will be top of the agenda, Mr Laschet also has long-standing structural issues to address.
In a report on the country’s economy released this morning, insurer ING wrote: “The rebound of the German economy was weaker than in many other eurozone countries as the manufacturing sector suffered from supply chain problems.
“In fact, the economy showed two faces in the second quarter.
“One of strong domestic demand with private consumption increasing by 3.2 percent QoQ and government spending up by 1.8 percent and one of almost sluggish investment and exports (both up by 0.5 percent QoQ each).
“Of all components, only government spending has currently returned to pre-crisis levels.”
It added: “Looking ahead, three factors will determine the outlook for the German economy: the Delta variant, supply chain frictions and inflation.
“While in recent days financial markets showed growing concerns about the Delta variant and its potential to dent the global recovery, we actually see supply chain frictions and not the coronavirus as the biggest risk for the German economy in the second half of the year.”
Additional reporting by Monika Pallenberg
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