Germany’s economy battered by gas crisis

GERMANY’s growth ground to a halt in the second quarter of the year as the energy crisis bit.

Output in Europe’s largest economy was flat between April and June, after growing 0.8pc in the first quarter, intensifying fears of a recession in a country dubbed ‘the sick man of Europe’ by economists, as it is battered by reliance on Russian gas and Covid-related issues in its manufacturing sector.

But the wider eurozone economy surprised, recording growth of 0.7pc against predictions of 0.2pc, according to Eurostat.

Spain, Italy and France performed particularly well, notching up second-quarter growth of 1.1pc, 1pc and 0.5pc respectively.

Bert Colijn, an economist at ING bank, said much of this was due to a rebound in tourism and the hospitality industry reopening. This was masking ‘underlying weakness due to high inflation and manufacturing problems’.

Colijn added: ‘From here on, we expect GDP to continue a downward trend as the services reopening rebound moderates, global demand softens and purchasing power squeezes persist. We expect that to result in a mild recession starting in the second half of the year.’

The data came a day after it was revealed the US economy shrank in the second quarter, marking the start of a technical recession.

Inflation hit a record 8.9pc in the eurozone in July, piling pressure on the European Central Bank to push ahead with aggressive interest rate hikes.

This month it lifted its base rate for the first time in 11 years.