Think the U.S. economy is bad?

[Jeslek]

http://www.guardian.co.uk/business/story/0,3604,957218,00.html

Heart of eurozone skips a beat as Germany slips into recession

Gerhard Schröder's embattled government was plunged into fresh crisis yesterday when a second quarter of falling output pushed Europe's powerhouse economy into recession and caused growth to grind to a halt across the 12-nation eurozone.

The Netherlands joined its larger neighbour in suffering two consecutive periods of retrenchment, with falling output in Italy in the first three months of 2003 piling additional pressure on the European Central Bank to boost growth through an emergency cut in interest rates.

With growth even weaker than the gloomiest of forecasts, financial markets warned of increasing strain on budget deficits across the eurozone, where Germany and France are already on course this year to breach the 3% limit imposed by the EU stability and growth pact.

Germany's finance minister, Hans Eichel, said there was scope for the ECB to reduce interest rates from their current level of 2.5% but warned that the budget deficit would be close to 4% this year and would require spending cuts to bring it below 3% in 2004.

Official figures yesterday showed the start of the war against Iraq coincided with the weakest growth performance in the eurozone for more than a year, with GDP in the first three months unchanged against the fourth quarter of last year.

Economists said Germany would barely grow at all in 2003 after its economy contracted by 0.2% in the first quarter. Meanwhile, Italy's GDP fell by 0.1% and that of the Netherlands by 0.3%.

Martin Essex, an analyst at Capital Economics, said: "As GDP contracted in the final quarter of last year in Germany and the Netherlands, both are technically in recession. Moreover, no end to Germany's woes is in sight. Interest rates remain too high, the stability pact restricts the government's ability to loosen fiscal policy, the chancellor is too weak to tackle structural problems and the euro's strength has worsened conditions for the external sector at a time of slack domestic demand."

Mr Eichel said he hoped the deficit would be below 4% in 2003 and that Germany must do all it can to respect EU rules in 2004.

Kyoto kicking in...

 

[Professur]

Worst mistake Britain ever made was hitching themselves to that cart. Well, maybe second. Helping save France is way up there too.

 

[Jeslek]

I don't get it. Germany is in a recession and the ruling party is HIKING TAXES. I mean, what the hell?

 

[Professur]

Don't look at me. My brother was the economics major.

 

[Jeslek]

http://www.dw-world.de/english/0,3367,1429_W_868852,00.html

There's been more bad news for the German economy. Officially it is now in recession after the Federal Statistics Office announced on Thursday that for the second consecutive quarter Germany's gross domestic product had dropped. It fell by 0.2 percent in the first quarter of this year and 0.03 percent in the last quarter of 2002. Recession is defined as two consecutive quarters of negative growth. To make matters worse, Finance Minister Hans Eichel is facing a larger-than-expected tax shortfall. He said tax revenue for this year would be 8.7 billion euros lower than forecast. Over the next three years the shortfall is expected to total 126 billion euros.

 

[Gonz]

Worst mistake Britain ever made was hitching themselves to that cart.

The fat lady is still in the shower

BBC

 

[ris]

we're stil undecided as to whether we will be joining the euro currency, the expectation is that june 9th will see a statement from the prime minister that we aren't 'ready' [for ready read not economically in our interests].

the reality about the german economy is that it is like the rest of europe, euro or not, in being headed for recession for a while. i was told in scandi that they were going into recession and that includes 2 countries without the euro and one not even part of the eu [norway]. that was 6 months ago - come back in 2 years they said.

everyone is feeling the pinch; technology slumps, poor stock performance and general world-wide uncertainty. kyoto has very little to do with it in germany when also compared to the price of reunification which is still being sorted and paid for. east germany is still in quite a bad way.

as for their tax spending, its our countries taxing and subsequence major public spending on schools and hospitals that is preventing us from going into recession ourselves at the moment. i was under the impression that most major public buildings in germany [certainly berlin] are now complete though, and that is a good marker for an economy - buildings are expensive and nearly alway the last things started and first things stopped economics-wise.