German economy stagnates with no growth in last quarter


10.08am GMT10:08 Eurozone only grew by 0.1% in the last quarter Just in: The eurozone nearly stalled in the final quarter of 2019, dragged down by weakness in its three largest economies. Statistics body Eurostat reports that the euro area and the wider European Union only grew by 0.1% in October-December. That’s down from 0.3%…

Eurozone only grew by 0.1% in the last quarter

Just in: The eurozone nearly stalled in the final quarter of 2019, dragged down by weakness in its three largest economies.

Statistics body Eurostat reports that the euro area and the wider European Union only grew by 0.1% in October-December. That’s down from 0.3% growth across Europe in July-September

Eurozone GDP

Eurozone GDP Photograph: Eurostat

Germany stagnated (as we learned at 7am), while France and Italy contracted during the quarter.

On an annual basis, the eurozone only grew by 1.2% in 2019 while the EU expanded by 1.4%.

This matches Eurostat’s ‘flash’ GDP estimates from a couple of weeks ago, and confirms that Europe ended 2019 on a weak note.

Paul Sommerville of Sommerville Advisory Markets points out that Germany’s economy has been basically flat for nine months:

Paul Sommerville

#German GDP numbers confirm no growth at all in last 9 months of 2019.

Germany on verge of recession ( again) and these numbers are all from BEFORE #coronavirus

February 14, 2020

European stock markets are subdued today, following Germany’s underwhelming growth figures.

The Stoxx 600 index is flat, having dropped yesterday as traders fretted about a sharp leap in coronavirus cases.

In London, the FTSE 100 is being pulled down by RBS (-6%); its weak outlook has also pushed Lloyds and Barclays down almost 1%.

European stock markets, February 14 2020

European stock markets this morning Photograph: Refinitiv


RBS outlines climate emergency plan

RBS CEO Alison Rose.

RBS CEO Alison Rose. Photograph: Simon Dawson/Reuters

Over in the City, shares in Royal Bank of Scotland have slumped 6% as new chief executive Alison Rose outlines her strategy alongside its latest financial results

RBS is being rebranded as NatWest, with Rose perhaps hoping to put the legacy of the bank’s bailout firmly into history.

She is also slashing the size of its investment bank and cutting its long-term profitability targets. But arguably the most important news is that RBS has laid out its climate emergency strategy.

It plans to”at least halve” the climate impact of our financing activity by 2030, and will phase out all support for the coal industry by the end of the decade. It will also stop lending to energy firms from next year if they don’t have a plan to help achieve the Paris Agreement goals.

Rose concedes this will be tough:

This will be a significant challenge as we, like others, do not yet fully understand what this will require and how it will be achieved, not least as there is currently no standard industry methodology or approach. Solving this will require UK and international industry, regulators and experts to come together and find solutions. We are determined to not just play our part, but to lead on the collaboration and co-operation that is so critical to influencing the transition to a low carbon economy.

RBS also posted a 93% jump in profits for 2019. Investors, though, are disappointed that RBS didn’t announce a larger special dividend today. They may also be concerned that the bank says it faces a “range of significant risks and uncertainties” from political, economic and regulatory angles.

Euro hits lowest since May 2017

The euro has dropped to its lowest level in over two and a half years, after this morning’s German GDP figures.

The single currency has dipped to €1.0828, its weakest levels since May 2017, extending its recent losses.

The euro vs the US dollar

The euro vs the US dollar Photograph: Refinitiv

ING: Germany at risk of recession

The risk of a full-blown recession is hanging over Germany, says economist Carsten Brzeski of ING.

He fears that the Covid-19 outbreak will hurt Germany, although a pick-up in construction could cushion the blow.

Having analysed today’s GDP report, Brzeski writes:

Looking ahead, the latest soft indicators and industrial data for December do not bode well for the short-term outlook. Also, the impact from the coronavirus on the Chinese economy is likely to delay any rebound in the manufacturing sector as it at least temporarily disrupts supply chains.

However, despite these rather discouraging factors, there are several – partly technical – drivers which should soften any pessimism. The poor performance of the construction sector in the fourth quarter was mainly driven by the Christmas break. With mild winter weather, a rebound in the first quarter looks likely. Also, changes in the inventory cycle could support growth in the short run.

Brzeski reckons that hopes of a strong rebound this year have been wiped out:

Some weeks ago, we had started to investigate which form the recovery could take from the alphabet soup of options. Will it be a ‘V’ for a strong rebound, a ‘U’ for a longer bottom followed by a strong rebound, a ‘J’ for a longer period of stagnation followed by a weak rebound, an ‘L’ for a long period of stagnation or even a ‘W’ for a double dip recession? Today’s data shows that the alphabet soup has been taken off the menu for the time being.

Stagnation, with a risk of a technical recession, currently looks like the only dish served.

ING Economics

There’s no end in sight to Germany’s stagnation, says @carstenbrzeski

February 14, 2020

Stagnation is bad, but there’s some relief that Germany didn’t do even worse.

Oliver Rakau of Oxford Economics feared German GDP could actually have contracted in the last quarter, given recent weak data:

Oliver Rakau

Phew! German GDP stagnated in Q4. That was slightly below Consensus, but monthly hard data would have suggested something much worse. At the margin a slight relief. Now waiting for @destatis_news to provide some commentary as regards the composition.

February 14, 2020

Bloomberg’s Fergal O’Brien agrees:

Fergal O’Brien

Friday cheer from Germany. Yes, GDP growth is zero, but at least it wasn’t contraction. And Q3 growth revised up to 0.2%. That’s worthy of a `woo hoo!’ given some fears for what today might bring.

February 14, 2020

But currency analyst Marc-André Fongern is concerned about Germany’s prospects this year, given the coronavirus outbreak will hurt its manufacturing base.

Marc-André Fongern

[EUR] Germany’s latest economic figures (GDP) are not particularly shocking, yet the country’s domestic economy remains the Achilles’ heel of Europe. Taking into account the impending impact of the virus, concerns are still perfectly justified.

February 14, 2020

2019 was not a great year for Germany.

Today’s GDP report shows that the economy grew by 0.5% in January-March, only to shrink by 0.2% in April-June. Growth picked up by 0.2% in July-September, before fizzling out in the last quarter.

German GDP

German GDP Photograph: Destatis

Introduction: Germany economy stagnating

Good morning, and welcome to our rolling coverage of the world economy, the financial market, the eurozone and business.

Newsflash: Germany’s economy is flatlining, as a slowdown in spending and exports wipes out growth.

Figures just released show that German GDP was unchanged in the fourth quarter of 2019. Economists had expected a rise of 0.1%, so this is disappointing (and matches the UK’s own performance in Q4).

On an annual basis, the German economy only grew by 0.6% during 2019, Destatis adds. That’s a very weak result, as Europe’s largest economy struggles to handle trade tensions, changes in the auto industry, and a slowing European economy.

It’s not all gloom — growth in the third quarter has been revised up to 0.2%. But the general picture is weak:

Holger Zschaepitz

Ouch! German economy stagnated in the fourth quarter. German 4Q GDP Adj 0.0% QoQ.

February 14, 2020

Destatis, Germany’s statistics body, reports that household and government spending both slowed in the last quarter, while investment from companies was mixed.

After a very strong third quarter, the final consumption expenditure of both households and government slowed down markedly. Trends diverged for fixed capital formation.

While gross fixed capital formation in machinery and equipment was down considerably compared to the third quarter, fixed capital formation in construction and other fixed assets continued to increase.

Donald Trump’s trade wars also hurt Germany. Destatis reports that German exports were “slightly down” in the last quarter, while imports of goods and services increased.

Later today we’ll get an updated reading on eurozone GDP for the last quarter. Preliminary figures release last month showed that the region only grew by 0.1%, with France and Italy shrinking.

More to follow!

The agenda

  • 7am GMT: German GDP for October-December 2019, first estimate
  • 10am GMT: Eurozone GDP for October-December 2019, second estimate


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