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EU Plunges Deeper Into Recession As Germany Stumbles

Feb. 14, 2013 10:00pm Becket Adams

EU Woes Not Taking a Big Toll on Germany

German Chancellor Angela Merkel. (Getty Images).

BERLIN (TheBlaze/AP) — It was only a matter of time. With many of its debt-ridden euro partners in recession, Germany could only swim against the tide for so long.

Figures Thursday showed that output in Germany, Europe’s largest economy, contracted by more than anticipated in the last three months of 2012. And it was the German drop that lay behind a deepening of the recession across the economy of the 17 European Union countries that use the euro.

Eurostat, the EU’s statistics office, said the eurozone’s economic output shrank by 0.6 percent in the final quarter of 2012 from the previous three-month period. The decline was bigger than the 0.4 percent drop expected in markets and the steepest fall since 2009, when the global economy was in its deepest recession since World War II.

Thursday’s figures highlight the scale of the problems that have afflicted the single currency zone over the past year. Fears of a break-up, if not a collapse, of the currency dented confidence at a time when many governments were embarked on fairly severe debt-reduction programs.

Getty Images

In 2012 as a whole, the eurozone economy shrank by 0.5 percent, a stark contrast from the 2.2 percent growth recorded in the U.S. and the 1.9 percent in Japan.

The eurozone has contracted for three straight quarters (a recession is officially defined as two quarters of negative growth). The eurozone is not alone in finding it increasingly tough as the year progressed but the fourth quarter figures confirm the region is struggling worse than others.

If the quarterly rate is annualized, the eurozone would be contracting by around 2.5 percent, much worse than 0.1 percent drop in the U.S. and Japan’s 0.4 percent fall. Eurostat does not provide annualized comparisons.

The worry for European policymakers is that output is declining not just in the weaker, debt-laden economies such as Greece and Spain, where governments have been aggressively increasing taxes and cutting spending in order to get a grip on their public finances and relieve the pressure inflicted on them by skeptical investors.

The standout from the quarterly figures was Germany. Its economy shrank by a quarterly rate of 0.6 percent in the fourth quarter, more than the 0.4 percent expected, as demand for its exports from its European neighbors were dragged down by the underlying economic malaise.

France, Europe’s second-biggest economy, also saw output drop by 0.3 percent. Both economies are now one quarter away from recession.

The Eurostat figures showed that seven eurozone countries were in recession at the end of 2012 – Greece, Spain, Italy, Cyprus, Portugal, The Netherlands and Finland. If upcoming figures for Slovenia show it contracted for the third quarter running in the final three months of the year, than that number rises to eight, almost half the eurozone.

French President Francois Hollande. (Getty Images).

France remains a greater cause for concern as its economy faces a number of problems that don’t trouble Germany as much. The French government has to keep a tight leash on its finances, unemployment is around 10 percent and its exporters are struggling, not least in the auto sector, with both Peugeot-Citroen and Renault struggling.

Though many analysts think France’s recent structural reforms will help make the economy more competitive, any tangible gains will not be seen for a while.

–

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Featured image courtesy Getty Images

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Comments (63)

WCJ
Posted on February 15, 2013 at 6:18am
Socialism running out of other peoples on parade. Coming to a U.S. city near you. “I just want to spread the wealth around” Barack Obama 2008.

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- The_Cabrito_Goat
  Posted on February 15, 2013 at 2:16pm
  Margerat Thatcher: “The problem with socialism is that you eventually run out of other people’s money to spend.”
  
  Germany is the De Facto leader of the European Union.
  
  If a mighty economic engine like Germany is reeling, this should give you pause.
  
  Report this comment
NoSleeper
Posted on February 15, 2013 at 5:24am
The currency wars have already begun, and the Euro will have to be devalued for the EU to remain competitive. I find it disturbing that we began the mess with our ‘quantitative easing’ and now complain when other countries have to follow suit. Our brief ‘recovery’ was at the expense of other countries and, more importantly, by the destruction of individual wealth within this country.

I would like to see our Government report real unemployment numbers (not just those currently collecting benefits) and real inflation numbers (not the filtered garbage they toss out now). So much for truth and transparency.

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woodyee
Posted on February 15, 2013 at 5:16am
Then again, I can take a Leftist point of view…

“The problem with Europe is that their taxes aren’t high enough – they should take a cue from France!”

GYRO, RJJ or MONK – “Erah, Woodyee, uh, the French aren’t doing so hot…”

“WELL! That’s because their taxes aren’t high enough! You see?”

(Gee, if I were to say that and mean it, imagine what a hero I’d be to my MarybethElizabeth! Oh, yeah, I’d have to confess to being stupid, but still, I’d be a HERO!)

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- Gonzo
  Posted on February 15, 2013 at 7:50am
  Germany should invade France. It won’t help the economy, but it will make them feel better. It’s been a while.
  
  Report this comment
- dublinthewagons
  Posted on February 15, 2013 at 8:31am
  Gonzo: France still has its white hankerchiefs. Er I mean battle flags. Cough cough
  
  Report this comment
- Ben__Franklin
  Posted on February 15, 2013 at 9:29am
  It would turn out just like the last time. The Frenchie French will all guard the Maginot line while Germany fakes a pass through Belgium, and runs around the defense through the Ardennes. Half the Frenchie’s will wave their White Flags they were born with while the other half joins Germany in killing their own.
  
  Report this comment
woodyee
Posted on February 15, 2013 at 5:08am
“…output is declining not just in the weaker, debt-laden economies such as Greece and Spain, where governments have been aggressively increasing taxes…”

Well, waddaya know? Do you mean to say that higher unemployment payouts DO NOT result in healthier economies, contrary to Pelosian economics?!?!? Who Knew!!! (Nancy Pelosi, and you heard the term here first, folks!)

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- JacquesChirac
  Posted on February 15, 2013 at 10:43am
  Woodyee – just like passing Obamacare, you’ve got to let countries totally fail to see what total failure looks like!
  
  Report this comment
woodyee
Posted on February 15, 2013 at 5:02am
“The decline was bigger than the 0.4 percent drop expected in markets and the steepest fall since 2009, when the global economy was in its deepest recession since World War II.”

THAT AIN’T BUSH Baby! The ONLY thing we’ve have had in common with the European’s since Gaybama’s election is socialized spending on a scale never before seen in our Country. OUR decline for the last quarter was a FULL 1% (and probably worse since it’s Obammy’s media reporting what they can’t hide).

They’re out of other people’s money. They can’t afford to prop up takers when makers are dropping like flies – sound familiar – like us? Remember who won the last election? Here’s a reminder – “Bama-phone! Keep Obama in Presdnet, you know?”

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Rayblue
Posted on February 15, 2013 at 2:27am
Starvation. The trend of scarcity. Extreme prices. All of a working individuals income needed just to survive. Control of wages and control of prices, limiting radically(and artificially) the consumption of all who are not on the “team”. Although famine has always been with us on this planet, and its intensification is a sign and a characteristic of tribulation, the trend here is a man-made one, an outrageous and untenable economic situation brought on by outrageous policies. The “balance” is a weapon of economic control and torment. Witness the progress of digression as the days turn to hours and the hours to minutes.

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- shorelineliz
  Posted on February 15, 2013 at 3:16am
  Just do what Iceland did. Tell all the predatory EU lenders like Germany to shove it and tell them you aren’t paying them back. Iceland is doing great now!
  
  Report this comment
RaydocX
Posted on February 15, 2013 at 12:29am
A lib friend today was insisting somehow employers can pay a higher minimum wage with noipact on employment or prices, that austerity is the problem causing recession in the EU, and that California fired all republican politicians and has balanced their udget and has only 6% unemployment… And cited resources making those ridiculous clais as being factual… A science based, critical thinking uy…

We are SO screwed when even watching the results of following this progressive train wreck as the EU has done years longer then us aren’t recognized for the warnings we shudder be taking them for, and when logic is no longer in use here at home.

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- Witness1974
  Posted on February 15, 2013 at 12:52am
  I was watching a foreign news channel today and there was an article about all the suicides in Europe because of the dismal economic outlook. They’ve had several people immolate themselves.
  
  If your friend has a comparable house to mine tell them I will trade straight across in a heartbeat. That person can come enjoy California paradise first hand. And we are just a short drive away from San Bernardino, a now bankrupt city where progressives have been running the show for years. It’s a liberal playground–I wouldn’t advise them to go at night though.
  
  Report this comment
- brother_ed
  Posted on February 15, 2013 at 8:31am
  We have liberals here in Texas…I see an Obama/Biden bumper sticker on occasion…but for the most part I am surrounded by like-minded people. They only exception is my neighbor, so I avoid talking politics with him.
  
  When we talk to people who have a hearing problem, we naturally speak louder and slower so they can understand us. Oddly enough, we also do the same for those who don’t speak English, as if it will help!
  
  I used to yell at liberals, because I thought they were just hard of hearing, now I realize how futile it is, because I realize they don’t speak the same language as me.
  
  My sympathies to you two gentlemen.
  
  Report this comment
marmond
Posted on February 15, 2013 at 12:07am
Germany’s economy was solid as a rock until they began bailing out the other Euro countries that spend more than they take in in taxes. Now that Germany, a country of makers, is in trouble where are the takers going to get help. From the United States of course because we as a nation are not contributing our fair share to the rest of the world. Watch what happens in the United Nations, the G 20 and World Banking. We will soon be bailing out Europe because our great leader will tell us it is the “common sense” thing to do.

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Maxim Crux
Posted on February 14, 2013 at 11:53pm
Germany is filling the void left by the destruction of Obama. Merkle will not be reelected and Germany will be looking for a NEW SAVIOR. They already are

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- Witness1974
  Posted on February 15, 2013 at 12:53am
  I’m sure Merkel must be feeling tense. Perhaps she should call George Bush to give her another neck rub.
  
  Report this comment
- Witness1974
  Posted on February 15, 2013 at 1:12am
  http://www.youtube.com/watch?v=eTQY1Aw9zcs
  
  Report this comment
ALL4FREEDOM
Posted on February 14, 2013 at 11:44pm
Why do you think the American luxury real estate market is suddenly doing so well? Folks with cash in Europe and elsewhere are getting the hell out. The Fed bought more treasury securities than the treasury issued. Why? Because investors aren’t buying the maturing debt that the government wants to roll over (this is being kept quiet). The whole, rotten system is about to collapse, and when our interest rates rise, we’re finished.

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- dublinthewagons
  Posted on February 15, 2013 at 8:39am
  BINGO!! you get the cigar. Very few get it.
  The blind sheep eed the hungry wolves
  
  Report this comment
KangarooJack
Posted on February 14, 2013 at 11:18pm
Truth is- this is a BIG STORY- but most won’t even think to read it, much less follow it. At least most here in the U.S. Germany was/is the ONLY stable Nation in the entire EU and sounds like -Germany is tired of bailing out the rest of the cesspool. Gee, whatta think will happen next?

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- RLGipe
  Posted on February 15, 2013 at 12:27am
  remember what oblamo said the other night, We will set up free trade with europe, and everything will be just “fine” What jobs are left in the USA then they will be sent to europe and that will certainly fix all of their problems.
  
  Report this comment
- edotddot
  Posted on February 15, 2013 at 3:28am
  @RLGRIPE It’s a good thing that Europe is flush with cash and can buy all of our exports. Yippee, we’re saved!
  
  Report this comment
jman-6
Posted on February 14, 2013 at 11:06pm
For those of you thinking why in the world would Germany bail out the others, it’s real simple if you sell the majority of your goods to them and they have no money your not selling anything! Now everyone with a little objectivity can see the charade that international finance really is! To quote the great philosopher Forrest Gump; “stupid is as stupid does”! GOD SPEED

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revelation2012
Posted on February 14, 2013 at 10:45pm
the surge of foreign peoples IN America and our coasts being monitored

and the government wants to DISARM all of us ,,, what’s amiss

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chicago76
Posted on February 14, 2013 at 10:42pm
Mick you are so right.

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revelation2012
Posted on February 14, 2013 at 10:39pm
we better get the H*LL out of the United Nations ASAP stop all the foreign spending

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EVANROOD
Posted on February 14, 2013 at 10:38pm
As we go, so goes Europe and the rest of the world! I guess we’re not doing so well!

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Git-R-Done
Posted on February 14, 2013 at 10:27pm
If Germany didn’t have to bail out the rest of the EU, they wouldn’t be in this mess. But Germany was stupid enough to join the EU in the first place.

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- jman-6
  Posted on February 14, 2013 at 11:00pm
  They had no other choice! If you sell the majority of your goods to the 16 other Euro nations and they have no money your not selling anything! Now you can see the real charade going on now!
  
  Report this comment
Walkabout
Posted on February 14, 2013 at 10:21pm
The freaking left always opines that we should be more like the advanced Europeans.

-That is high unemployment.
-Crime that is starting to climb.
-Ethnic strife.
-Multi-culturalism (The Netherlands recently decided to get rid of Multiculturalism).

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Verceofreason
Posted on February 14, 2013 at 10:21pm
Lesson in life = AUSTERITY DOESN’T WORK

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- AxelPhantom
  Posted on February 14, 2013 at 10:24pm
  Lesson in life = don’t spend more than you have and austerity won’t be necessary.
  
  Report this comment
- Git-R-Done
  Posted on February 14, 2013 at 10:25pm
  Only idiots like you believe that austerity doesn’t work.
  
  Looks like Germany is doing better than the other EU countries that aren’t practicing austerity.
  
  Report this comment
- justangry
  Posted on February 14, 2013 at 10:33pm
  No interest based currency doesn’t work. It’s not designed to. It’s meant to rob nations of their wealth. The global central bankers are in their end game.
  
  Report this comment
- Verceofreason
  Posted on February 14, 2013 at 11:24pm
  Give it a rest already.
  A family budget has zero relationship to a running a country,
  Read the work of real economists
  A few natural disasters, man made disasters and unfunded wars and yer budget is
  down the toilet.
  
  Report this comment
- Witness1974
  Posted on February 15, 2013 at 1:07am
  VerceofReason: Read up a little on the Coolidge administration, that’s Calvin, not Rita. There was a stock market crash during his administration and instead of bailing everyone out, he cut government spending. There was no prolonged depression. In fact, there was a vigorous recovery. Now compare that to what FDR did. He managed to turned a single event into a decade of misery with all of his government programs. We are still suffering from what he did.
  
  Just what do you mean there is no correlation between a family budget and a government budget? A budget is a budget. Oh, wait a minute. . . I see what you mean now: A family can’t steal from its neighbors when things get tight; they have to quit spending and or work harder. A government on the other hand can steal all it want’s and then, in tones of righteous indignation and appeals to patriotism, steal some more. I get it now. Thanks.
  
  Report this comment
- Farmhand82
  Posted on February 15, 2013 at 1:19am
  And Verse takes another opportunity to try and argue that what we are plainly seeing isn’t true. So his solution is to just keep spendong until nobody is willing to lend anymore? Genius! Oh no that won’t bite anyone on the ass at all! Haha but no keep living in your little fantasy world. It’s hilarious to hear from you.
  
  Report this comment
- justangry
  Posted on February 15, 2013 at 2:27am
  Keynesians aren’t real economists.
  
  Report this comment
- edotddot
  Posted on February 15, 2013 at 3:34am
  It just doesn’t work in countries where they want to retire at age 50 and continue to get government goodies. Guess what, their population ran out of other people’s money.
  
  Report this comment
- Walkabout
  Posted on February 15, 2013 at 7:27am
  “A family budget has zero relationship to a running a country,”
  
  A nation is just a bigger conglomeration/aggregation/grouping of people. The rules of economics still apply.
  
  Verse_of_UnReason, my reply will stand unanswered & you will be considered to have fled the filed if you do not answer.
  
  At what point, what number of people, does the laws of economics that pertain to families do not pertain to a larger group of people?
  
  Maybe we could take that same number of people, n (or x if you prefer) and see if the law of gravity no longer works for that group of people.
  
  Report this comment
- Walkabout
  Posted on February 15, 2013 at 7:48am
  Keynes has got a bad rap.
  
  Keynes proposed saving up a rainy day fund during good times & spending it during an economic downturn. Keynes did not propose unlimited stimulus or Qeternity (QE for eternity which is what QE 4 is).
  
  Democrats butcher an economic theory because, the are functional innumerates (illiterate when it comes to numbers) and 1/2 a$$ psychologists. Sure they are good at demagogy but that is about it.
  
  Have you seen a Democrat that is an actuary or can grasp that subject?
  
  Report this comment
Saff SGT
Posted on February 14, 2013 at 10:17pm
clean your Guns lock and load get barricaded in you homes they are coming soon

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revelation2012
Posted on February 14, 2013 at 10:15pm
when they start to BLAME you can rest assured their progressive communists

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- revelation2012
  Posted on February 14, 2013 at 10:15pm
  they’re
  
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Saff SGT
Posted on February 14, 2013 at 10:15pm
And Germany wanted their Gold back, and US says only in 7 years??? Hm we know Obama gave all the Gold to the Muslim Brotherhood to help crush the NATO country’s and USA. There is no Gold in Ft Knox it has all been stolen. The only way to get in is have 1 million folks rush the place to see for our selves..Our Presidents have a lot of answering this is a Treasonable offence here.

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RationalMan
Posted on February 14, 2013 at 10:12pm
This wasn’t done by accident, but, on purpose!

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gyro
Posted on February 14, 2013 at 10:08pm
I feel sorry for Merkel she gets crapped on over and over then when shes going down they point and say it is her falt
The french will screw everything up

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semihardrock
Posted on February 14, 2013 at 10:05pm
Feb 14 (Reuters) – Officials in Alabama’s bankrupt Jefferson County approved a deal on Thursday with European Depfa Bank Plc to cut interest charges on about $162 million of the county’s school debt.

Reuters WONT LET ME post my “feelings” on this article!

Didnt those “evil banks” bundle BAD MORTGAGES (people of high risk) and sell them to European Banks?

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- semihardrock
  Posted on February 14, 2013 at 10:16pm
  What could go wrong?
  
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- The Big Mick
  Posted on February 14, 2013 at 10:22pm
  Sounds like a Global Version of Down Freddie’s Pants and Up Fannie’s skirt.
  Isn’t this what a Ponzi Scheme does, keep the financial ball in the air till the last guy at the table looses his chair and his shirt?
  Perhaps there are no Toxic Loans, only Toxic Bankers. Perhaps it is THEY who should be bundled in concrete and recycled as fish food.
  
  Report this comment
- revelation2012
  Posted on February 14, 2013 at 10:30pm
  Idea,,,,,,,,
  
  Report this comment
- Verceofreason
  Posted on February 14, 2013 at 11:26pm
  Chances are you were banned for a previous Terms of Service violation.
  I know from past experience.
  
  Report this comment

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