Germany flies into 'perfect storm' as economy heads towards recession

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Germany flies into ‘perfect storm’ as economy heads towards recession — live updates

Angela Merkel
Europe’s largest economy contracted in the second quarter Credit: Yorgos Karahalis/Bloomberg

Germany’s economy is halfway to recession, after shrinking in the three months to June as global tensions put pressure on its export-driven manufacturing sector.

Europe’s largest economy contracted by 0.1pc in the second quarter, following what state statistical office Destatis called “a slight decline in economic performance”.

Over the past year, Germany’s economy grew by just 0.4pc, its worst performance in years. A closely-watched survey of investors yesterday found German economic sentiment had plummeted to its lowest level since the Eurozone crisis in 2011.

Speaking before the widely-anticipated fall was published, Chancellor Angela Merkel said Germany’s economy was entering a “difficult phase,” adding: “We will react depending on the situation.”

If the German economy declines again between July and September — the third quarter — it will be seen as having entered a technical recession, which it narrowly avoided last year.

European stock markets opened in the red this morning, with Germany’s DAX down around 0.4pc. The continent’s top indices had rallied yesterday after the US announced it would delay tariffs on around $150bn of Chinese exports, easing fears of an impending trade war.

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