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Germany facing MAJOR RECESSION: Stark WARNING issued to Merkel as Berlin set for ‘crisis’

The nation which has the largest economy in Europe has been hit by a raft of weak economic data over recent months, sparking concerns of a financial cooldown and a new negative trend. Fears of a recession being on the cards have even begun to emerge, with analysts suggesting the latest disappointing production data had increased the risk of a technical recession after a 0.2 percent contraction in the third quarter. A recession is defined by economists as gross domestic product (GDP) falling for two consecutive quarters. The brakes have seemingly been slammed on a nine-year expansion in Europe’s economic powerhouse as an ongoing trade war between the United States and China and Brexit uncertainty continue to rattle global markets.

Mr Oettinger, a former Prime Minister of Baden-Württemberg, urged the Federal Government to prepare the country to deal with the eventuality of a financial crisis should the downward trend continue.

The EU Budget Commissioner has called on the government to reduce taxes as soon as possible in the event that the economic downturn worsens.

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Finance Minister Olaf Scholz said officials are working on plans including tax cuts as part of an effort to work through Berlin’s financial woes.

But Mr Oettinger said the Federal Government must still be braced to react quickly if necessary should the gloomy financial data from Germany fail to improve.

He told German television station WELT: “The tax burden in Germany is quite high in international comparison, especially in corporate taxation.

“We will have to wait and see how the tax reform will work in the US in the long run.

“But right now it provides a strong incentive to invest there.

“This is another reason why it would be good if the grand coalition implemented a structural reduction in income and corporation tax during this legislative period.

“Incidentally, the Federal Government is well advised to prepare for a crisis in order to react quickly if necessary. I think that makes sense and is necessary.”

Yesterday saw Germany hit by weaker than expected industrial output figures for the third consecutive month, fuelling signs that companies are shifting into a lower gear.

Data released on Tuesday by the Federal Statistics Office in Germany showed industrial output fell by 1.9 percent on the month in November.

This figure came in way below the 0.3 percent increase that had been forecast.

The output figure for October was revised down to a fall of 0.8 percent from a previously reported drop of 0.5 percent.

The Federal Statistics Office will publish preliminary GDP growth data for the fourth quarter and 2018 as a whole on Tuesday next week.

Altmaier last month lowered the government’s growth forecast for 2018 to around 1.5 to 1.6 percent, down from the previous estimate of 1.8 percent.

Earlier this month, a new survey showed the manufacturing sector in Germany slowed once more with new orders falling at the fastest rate in four years.

Markit’s Purchasing Managers’ Index (PMI) for manufacturing, which accounts for about a fifth of the economy, tumbled to a 33-month low of 51.5 in December, down from 51.8 in November.

The number is inching closer to the 50.0 level which marks a contraction.

It was the eleventh time in 2018 that the manufacturing index fell.

Disruption to levels of car production, caused by new pollution tests that were introduced back in September, have left a negative mark on the German economy, according to figures from last week.

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