European economy 'totally dependent on German growth'

Europe could be at risk of persistent deflation, due to a dependence on the German economy, it has been warned.

Results announced yesterday showed the German economy contracted in the three months to June, bringing growth in the Eurozone to a grinding halt.

Nick Bullman, founder and manager of Checkrisk, says Europe is on the edge of a "Japanese-style deflationary trap", which could have serious implications for Ireland.

He said that this is because Europe is too dependent on the German economy.

"The results in Germany in the first quarter weren't that great," he said.

"But the point is - Europe is totally dependent on German growth.

"France an Italy have essentially been in recession for three years. The technical term for a recession is two [consecutive] quarters of negative growth, but if you keep bobbing in and out of negative growth, you can hardly be saying you're economy is growing."