Household spending helps Germany avoid recession

GERMANY narrowly dodged a recession in the third quarter of this year, as higher spending boosted its flagging economy.

The country, dubbed Europe’s powerhouse for its industrial might, had been widely expected to slip into a recession following a downturn in its key manufacturing sector.

But an increase in spending from households and the government prevented Germany’s economy from shrinking for the second quarter in a row.

The figures from Germany’s Federal Statistics Office revealed its economy grew by 0.1pc between July and September.

But the organisation revised down its performance for the second quarter, from shrinking 0.1pc to 0.2pc, and lifted its firstquarter growth figures from 0.4pc to 0.5pc.

Matthew Cady, investment strategist at Brooks Macdonald, suggested the better-thanexpected numbers could be the ‘worst of both worlds’.

He said the figures were ‘not strong enough to assuage growth fears in the eurozone, and not weak enough to push Germany into a meaningful fiscal response’.

Germany’s slowdown has been catalysed by shrinking foreign demand for the items which the country exports, such as cars and machinery.

The ongoing trade war between the US and China has added to its troubles, as has the prospect of Brexit. The German economic ministry said: ‘The relevant economic indicators are not yet indicative of a fundamental change in the economic situation, but there are first slight glimmers of hope.’

More broadly, the combined economy of all 19 countries in the eurozone grew by 0.2pc in the third quarter of the year, according to data from the EU’s official statistics body Eurostat.

Across the 28 countries of the EU, including the UK, the combined economic output increased by 0.3pc while employment crept up by 0.1pc.

Economic growth in the UK, which has also just managed to avoid recession, was 0.3pc over the three months – around average – figures showed.