Stalled German economy will hurt euro

German Chancellor Angela Merkel

TEXT OF STORY

Bill Radke: The economic engine of Europe has run out of steam. Figures just released show the German recovery has stalled. Marketplace's Europe correspondent, Stephen Beard, has our story.


Stephen Beard: Europe's powerhouse helped pull the rest of the eurozone out of recession in the first half of last year. But the German economy stagnated in the last quarter. The end of the cash for clunkers scheme hit demand at home, and exports failed to pick up the slack. Germany's now suffering from Chinese competition.

Germany's weakness is casting a pall over the rest of the eurozone, and that, says Charles Dumas of Lombard Street Research, means more trouble for the single currency.

Charles Dumas: The euro economy is feeble and I would be expecting investors in euroland to be trying to get their capital out into places where there are rather better prospects. And of course, that will bring down the euro.

He says the Germans have made matters worse for themselves and the euro by insisting on big cuts in public spending in Greece and other southern European countries. He says that will further undermine demand for German goods.

In London, this is Stephen Beard for Marketplace.

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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