Slump in German exports

A COLLAPSE in German exports has left Europe’s largest economy close to recession.

As storm clouds gather over the global economy, sales of German goods overseas fell 1.3pc in the second quarter of the year.

It was the biggest decline in more than six years and pushed gross domestic product, the total size of the economy, down 0.1pc. If Germany suffers another contraction in the third quarter, from July to September, it will be in recession.

The UK also contracted in the second quarter, with output down 0.2pc, but is expected to bounce back in the third quarter, avoiding a recession.

The pound rose sharply against the dollar and the euro yesterday on hopes a Brexit deal will be struck. The slump in German exports – a key driver of its economy – comes amid a hostile USChina trade war.

Germany has also been hit by a fall in demand for diesel cars and uncertainty over Brexit.

A separate report showed business confidence in Germany is at its lowest level for nearly seven years. Carsten Brzeski, chief economist at ING Germany, said: ‘The short-term outlook remains bleak. The German economy is at a dangerous crossroads. The risk of another contraction in the third quarter and hence a technical recession has increased, not decreased.

‘The resilience of the domestic economy against the industrial slowdown and external woes has only started to weaken since the summer. While there could be a rebound in construction, little sign of exports rebounding significantly make another stagnating quarter very likely.’