Germany’s powerhouse hit by Covid fourth wave as Britain goes from strength to strength: EU’s largest economy slips to just just 1.7% growth

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Germany’s recovery began to stall even before the fourth wave of Kovid spread to Europe, figures have revealed.

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The EU’s largest economy grew only 1.7 percent in July to September – according to its federal statistics body Destatis, missing early estimates of 1.8 percent, and heading for a difficult year for the new government led by Olaf Scholz. By pointing.

Germany’s rebound slowdown meant its economy was still 1.1 per cent smaller in the third quarter of the year than it was before the pandemic, and was heading in the opposite direction to the UK where optimism was growing.


Germany’s rebound slowdown meant its economy was still 1.1 per cent smaller in the third quarter than before the pandemic, moving in the opposite direction to the UK.

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Britain’s rapid vaccination roll-out, including booster jabs for the most vulnerable, has helped the country return to relative normalcy, while much of Europe is now struggling to control rising cases.

Experts believe the chancellor-elect will be worse to come for Scholz, amid fears that growth will stall in the last three months of 2021 as the government is forced to reimpose pandemic restrictions .

In another sign of gloom in Germany, consumer confidence plummeted in November as households worried about rising Covid cases and rising inflation.

This was in stark contrast to the UK, where production appears to have increased despite inflation concerns and supply chain chaos due to the pandemic.

Figures from earlier this week showed business at Britain’s factories was booming, with production order books at their highest level since records began in 1977 when James Callaghan was prime minister.

And confidence in British shoppers soared in November, according to data analyst GfK, who said optimism from consumers was “good news for retailers for Black Friday and Christmas”.

In Germany, however, data from GfK showed that families’ trust was faltering.

Ariane Curtis, global economist at Capital Economics, said: ‘The outlook for the fourth quarter in Europe has deteriorated, with the risk that more countries will need to tighten restrictions amid the latest COVID surge.’

This was ‘particularly true for Germany’, he said, as weak activity in the services sector, which includes restaurants and retail, would add to the problems the economy is already facing with supply chain disruptions in car manufacturing. has been

Curtis said: ‘In contrast, recent data from the UK shows that the economy has held up relatively well, despite the ongoing supply crunch.’

While economists are expecting the UK to grow by 0.8 per cent in the last quarter of 2021, many now think Germany will freeze – or even shrink its output again.

The fragility will spell headaches for the country’s new coalition government formed this week, which is hoping to find funding to boost investment in technology and green energy.

Oxford Economics senior economist Ricardo Amaro said: ‘It is clear that the recent resurgence in new virus cases is leaving a mark on German sentiment. With some public health restrictions being tightened again, we expect economic activity to be hit as well.

He said it was ‘increasingly plausible’ that activity would contract in the last three months of 2021.


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