German economy is suffering its worst month for more than three years

Germany is suffering its worst month for more than three years.

Business activity is declining at the fastest rate since May 2020, and a downturn in the wider eurozone is a major headache for a European Central Bank (ECB) battling to control inflation.

It is now thought the bank could pause its interest rate hiking campaign, having raised rates to 3.75pc. S&P Global said the purchasing managers’ index (PMI) of business activity in Germany has hit a 39-month low of 44.7.

‘Stagflation is an ugly thing,’ said Cyrus de la Rubia, economist at Hamburg Commercial Bank. 

‘When inflation cannot be tamed in the eurozone’s biggest economy, this is bad news for the ECB. This will only fuel the discussion of Germany being the stick man of Europe.’