Germany set to slip into recession

Germany is likely to slip back into recession, putting the eurozone in jeopardy of contraction, a economic forecasting agency has said.

The London-based Centre for Economics and Business Research is predicting that after a brief spell of weak economic growth, the eurozone is perilously close to stagnating and falling back into contraction.

Its real GDP growth forecast for 2014 has been cut to 0.7% from 1.1% in July as the eurozone’s three biggest economies — Germany, France, and Italy — continue to struggle.

The German economy, which accounts for over a quarter of aggregate eurozone GDP, contracted by 0.2% in the second quarter with leading indicators suggesting that the situation may have worsened in the third quarter.

With a stagnant French economy and an Italian economy already in recession, the outlook is far from positive for the eurozone.

A weakening eurozone could put Ireland at risk of exceeding the 3% budget deficit target which Finance Minister Michael Noonan said the country would achieve unless growth collapsed.

Budget 2015 predicted revised GDP growth of 3.9% next year on the back of its measures — up from a predicted 3.6% increase based on no changes in policy.


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