The leading EU country’s GDP growth has floundered as it tries to finally shake the virus and a successor to longstanding leader Angela Merkel is found. And after a severe slump in 2020, the federal government has not gained enough momentum to achieve the above-average growth it was hoping for this year, it has admitted.
Today it emerged that it has downgraded its own predictions for this year’s growth and does not expect a strong economic upturn until 2022.
Initially the government expected GDP to increase by 3.5 percent this year.
However, amid dour forecasts this has been downgraded to 2.6 percent – far below the 6.5 percent growth Chancellor Rishi Sunak expects Brexit Britain to see.
Acting Minister of Economic Affairs Peter Altmaier (CDU) said earlier today that Germany was back on the growth path after the coronavirus crisis.
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He said: “If the delivery bottlenecks gradually resolve, there will be a clear catch-up effect in 2022.”
However, he painted a rosier picture for 2022 when he believes the German economy will gain significant momentum.
For 2022, the federal government is now expecting growth of 4.1 percent instead of the previous 3.6 percent.
The news emerged as a leading independent economist told Express.co.uk that the tanking of the EU’s biggest economy showed that Brexit was not to blame for the UK’s supply chain woes.
Julian Jessop, the former Chief Economist at the Institute for Economic Affairs (IEA) tweeted a graph produced by the IFO which highlighted a dramatic drop in confidence in the probability of economic expansion.
He commented: “Another reminder that Germany is being hit at least as hard (harder?) by global supply problems as #BrexitBritain: Ifo index fell further in October and, at face value, is now signalling #recession…”
The IFO’s report, published on Monday, warned: “Scepticism is increasingly evident in expectations.
“Capacity utilisation in manufacturing is falling. Sand in the wheels of the German economy is hampering recovery.”
Additional reporting by Monika Pallenberg