In the latest humiliation for EU leaders, new data has revealed that big-hitters France and Germany are dragging the eurozone towards a grim recession.
It comes as business activity in the bloc is at its lowest level in three years. Meanwhile excluding coronavirus times, economic indicator S&P Global’s PMI plunged to its lowest level since 2013.
It’s bad news for French President Emmanuel Macron and German Chancellor Olaf Scholz, as the latest revelation could cause tensions among other EU member states.
And it’s the latest setback for EU president Ursula von der Leyen, who is a big defender of the eurozone.
The recession fears have been sparked by the Israel-Hamas war in the Middle East, as well as an overall decline in global economic activity, The Telegraph reports. Rising interest rates are also partially to blame.
One expert said that “things are going south” in regards to the French economy, weeks after customers at one major French bank were warned to “move their money to the UK”.
Cyrus de la Rubia, chief economist at Hamburg Commercial Bank, said there is much to suggest that a recession in Germany is well underway.
He said: “In the eurozone, things are moving from bad to worse.
“We wouldn’t be caught off guard to see a mild recession in the euro zone in the second half of this year with two back to back quarters of negative growth.”
After contracting at the steepest pace since November 2020, business activity across France last month saw another huge reduction.
According to Forex factory, considerable weakness was also displayed on the demand side as new orders in France plunged for the sixth month in a row.
In addition to this, sales to non-domestic customers plummeted, declining to the quickest degree since May 2020.
Meanwhile the German economy ministry has promised 50 billion euros in tax relief over four years – even though October saw a renewed decline in the nation’s service sector.
It comes as, in a huge win for UK bankers, the cap on bonuses has been removed – which could not have been implemented without Brexit.
