‘Germany is drifting towards recession right now’: Deutsche Bank warns country’s economy ‘is a major disappointment’ as Europe faces Brexit fallout
- Factory orders fell 1.6 per cent in Dec, down by 7 per cent compared to Dec 2017
- There are major concerns Germany could soon follow Italy into a recession
- Increasingly likely prospect of no deal Brexit would be disastrous for Germany
German factory orders tumbled in December, the latest sign that the country’s industry is not yet out of the woods as the prospect of a no deal Brexit looms.
Despite a forecast rise of 0.3 per cent, industrial orders dropped by 1.6 per cent, and were down by an enormous 7 per cent year-on-year- prompting fears the country could be heading toward a recession.
Deutsche Bank warned: ‘The start of the German economy into 2019 has been a major disappointment so far.
Germany is ‘drifting toward a recession’, according to Deutsche Bank, which also called the start of 2019 a ‘major disappointment’
‘The development of several key cyclical indicators is telling us that the German economy is drifting towards recession right now.’
The drop – Germany’s largest in industrial orders since 2012 – begs the question of whether Angela Merkel could really afford to allow the UK to leave the European Union next month without a deal.
Commentators wonder whether Angela Merkel is really going to allow the UK to exit the EU without a deal on March 29
EU leaders are growing increasingly concerned at the prospect, with no agreement yet in place just 50 days before Britain leaves on March 29.
But the odds of Theresa May’s getting concessions from EU leaders have not increased after Thursday’s meeting in Brussels.
Markets were unimpressed by President of the European Council Donald Tusk’s comments there was a ‘special place in Hell’ for those ‘who promoted Brexit without even a sketch of a plan how to carry it out safely’.
The new disappointing data comes days after the government slashed its 2019 economic growth forecast from 1.8 per cent to 1 per cent.
Germany’s economy grew 1.5 per cent last year and 2.2 per cent in 2017.
German factory orders were dragged unexpectedly dragged down by weaker demand from abroad, in a further sign that the slowly world economy is hurting Europe’s largest.
The overall drop was driven by a 5.5 per cent plunge in orders from clients outside the euro zone while domestic orders edged down by 0.6 per cent.
‘The decline in orders in December indicates that the industry’s phase of weakness is continuing for the time being,’ the Economy Ministry said, while Bankhaus Lampe economist Alexander Krueger took a harsher tone, saying: ‘It’s clear now that the best times for German industry are over’.
‘In view of the slowing global economy and many political risks, it is doubtful where new and sustainable growth impulses should come from in the near future,’ Krueger added.
The markets looked shaky as the chances of Britain leaving with no deal were increased after talks between Theresa May (left) and the EU appeared to reach no conclusion this week. President of the European Council Donald Tusk (right) said there was a ‘special place in Hell’ for those ‘who promoted Brexit without even a sketch of a plan how to carry it out safely’