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As Germany stumbles, will the rest of Europe fall down with it?

German Chancellor Angela Merkel (R) and Polish Prime Minister Donald Tusk (L) chat prior to the start of a discussion on Europe in Berlin April 22, 2013.

Linked by a common currency, the countries in the euro zone are roped together like climbers scaling a cliff face. If one or more loses their footing, the rest  could come crashing down.

That is the threat contained in a survey out today. Markit’s April Purchasing Managers’ Index (PMI) for the euro zone shows Europe’s biggest economy -- that of Germany -- is stumbling. Private sector output in Germany has fallen for the first time since last November.

There was slightly better news from France, where the PMI survey indicated that the private sector contracted at a slower rate in April than before. But Germany’s slowdown seems likely to drag the rest of Europe down with it.

In a recent interview with Marketplace Morning Report host Jeremy Hobson, French Finance Minister Pierre Moscovici blamed the euro zone for his country’s economic malaise:

“The problem is the euro zone is the place where we live,” he said. "The difficulty is the euro zone is going to have a second year of recession. It’s very difficult for a country like France to grow when its own environment is weak.”

The PMI survey doesn’t offer much hope of early improvement. Analysts say it indicates that the downturn in the euro zone is intensifying.

About the author

Stephen Beard is the European bureau chief and provides daily coverage of Europe’s business and economic developments for the entire Marketplace portfolio.
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