Europe’s four biggest economies — Germany, France, Italy, and the UK — are close to negative growth as German industrial output dropped unexpectedly in January, which led France to outperform its larger neighbour but not replace Germany’s economic might as an engine for growth in the Eurozone.
According to the German national statistical service, German industrial output dropped by 0.8% in January against projections by a Reuters survey that pointed to a 0.5% increase. Driven by full employment, the German economy is still growing, but it is unheard of for the biggest economy in the Eurozone to rely on easy credit conditions and the domestic market in an economy where one in five jobs depends on exports. As a result, the German economy grew by an anaemic 0.2% in the last quarter of 2018.
Meanwhile, the Bank of France has trimmed its forecast for the country’s first-quarter economic growth from 0.4% to 0.3%. Business confidence in the manufacturing and service industries is surging, but the mood across the Eurozone is weighing heavily on the bloc’s second-largest economy.
Italian industrial production shot up 1.7% in January with respect to December, but, the rise was driven by the energy sector in part because demand was higher than a year ago. Despite January’s rise, the November 2018-January 2019 period was the worst three months for industrial production since 2012-2013, with overall output down 1.8%.
Italy is officially in recession, having experienced two consecutive quarters of overall negative growth.
The UK economy created 400,000 jobs in 2018, but overall the economic situation in Britain is slowing due to Brexit and weakening global trade.