Rolling coverage of the latest economic and financial news, as Germany suffers a 0.1% drop in GDP in April-June
- Breaking: German GDP shrank 0.1% in April-June
- Exports have fallen as trade wars bite
- Germany has only grown by 0.4% over the last year
- Coming up: UK inflation at 9.30am
The slump in German growth could force Angela Merkel to ditch her long-running opposition to government borrowing.
Germany’s ‘debt brake’ law forces its leaders to run balanced budgets, rather than running up deficits. But with an economy struggling, and borrowing costs extremely low, there’s a strong argument for tapping the bond market to fund more investment.
We are getting to a point where the German government has to do something to stimulate the economy.
“It’s true, we’re heading into a difficult phase….We will react depending on the situation.”
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Unicredit analyst Andreas Rees reckons Germany’s economy has been hurt by the uncertainty over Britain’s exit from the European Union.
For a year now, the German economy has been only crawling forward.
Besides Brexit, this is above all the U.S.-Sino trade dispute and possible U.S. tariffs on European cars.