London Daily

Focus on the big picture.
Monday, Jul 13, 2026

Germany in recession as economy takes biggest hit since crash

Germany in recession as economy takes biggest hit since crash

While the country may face its deepest downturn since World War Two, it is set to fare better than its neighbours.
Germany is officially in recession after its economy shrank by 2.2% in the first quarter of the year as the global coronavirus shutdown began to bite.

The latest official data gives an insight into the damage caused by the COVID-19 pandemic to Europe's biggest economy, with worse expected to come.

The fall over the three months to March was the second-biggest quarterly decline since German reunification in 1990.

It was beaten only by a 4.7% drop in the first quarter of 2009 at the height of the financial crash.

It follows a 0.1% contraction in the fourth quarter, which was revised down from an initial report of zero growth.
Advertisement

That change puts Germany into a technical recession, with two consecutive quarters of economic contraction.

Like other European countries, Germany did not go into lockdown until around mid-March, and so the main impact of the restrictions on people and businesses will only become apparent in the current second quarter.

A 10% economic contraction is widely forecast for the period, although "the exact extent of the slump depends in part on the easing of restrictions on public life", said Albert Braakmann of Germany's federal statistics office.

ING's chief economist for the eurozone, Carsten Brzeski, said: "If today's data are the result of two weeks of lockdown, three more weeks of lockdown and a very gradual lifting of some measures do not bode well for the second quarter."

It strengthens expectations that Germany is facing its deepest recession since World War Two.

But forecasts are worse for other European countries including France and Italy, which are already in recession, after the economies shrank by 5.8% and 4.7% respectively in the first quarter.

Data already released has shown that the 19-nation eurozone's economy shrank by a record 3.8% in the first quarter as the economy ground to halt.

Allianz economist Katharina Utermoehl said in a research note that the German economy looked set to emerge faster and in a stronger position than most of its neighbours.

She pointed out that other nations needed stricter and longer lockdowns and their greater reliance on the services and tourism sectors.

She also said "the decisive and comprehensive policy action on behalf of the German government has been key in limiting the economic damage".

Many German employers were able to switch staff to shorter working hours during the outbreak, avoiding mass redundancies, under the terms of a €750bn (£668bn) government rescue package.

The country's 16 states also chose to allow factories and building sites to remain open.

Recent data showed construction - which accounts for almost 10% of the economy - grew by 1.8% in March.
Newsletter

Related Articles

0:00
0:00
Close
United Kingdom Financial Markets Monitor Business Response to Economic Policy Changes
Scottish Renewable Energy Expansion Highlights Need for Faster Grid Development
Wales and Regions Strengthen Focus on Economic Development Through Tourism and Investment
Retail Industry Warns High Street Businesses Remain Under Pressure
Police Chiefs Highlight Growing Challenges Managing Protests and Public Order
Agriculture Leaders Seek Clarity on Post-Brexit Farming Support and Environmental Rules
Transport Unions Warn of Further Industrial Action Over Pay and Working Conditions
Welsh Tourism Sector Reports Strong Growth Driven by Domestic and International Visitors
National Infrastructure Review Gains Support as Leaders Seek Faster Project Delivery
Financial Markets Assess Impact of United Kingdom Corporate Tax Policy Changes
Northern Ireland Assembly Debates Cross-Border Trade and Infrastructure Cooperation Plans
Government Opens Consultations on Housing Reform and Planning System Changes
Scottish Government Faces Pressure to Accelerate Offshore Wind and Grid Expansion
National Energy System Operator Warns Grid Investment Is Needed for Future Electricity Demand Growth
United Kingdom Research Council Invests in Artificial Intelligence and Biotechnology Innovation Hubs
United Kingdom Expands Oversight of Skilled Worker Visa Sponsors Amid Migration Debate
Cross-Party MPs Call for National Infrastructure Strategy Review to Accelerate Economic Growth
Prime Minister Announces One Billion Pound NHS Funding Package Ahead of Winter Pressures
Bank of England Signals Cautious Approach to Interest Rates as Inflation Remains Above Forecasts
World Cup Visitors Turn American Big-Box Stores Into Souvenir Stops
Netflix Weighs Always-On Channels, Bundles and Short-Form Video
Passenger Is Pulled Partly Outside Ryanair Jet After Window Fails Mid-Flight
Innovation-led growth strategy
Public service reform pressure
Defence and industrial security
Labour leadership transition and economic reset
Northern England Pushes for Greater Influence in Britain’s Future Economic Model
UK Technology Strategy Focuses on Life Sciences, Digital Innovation and Research Investment
Britain and United States Maintain Focus on Pharmaceuticals Cooperation and Industrial Growth
UK Public Services Face Continued Pressure as Government Promises Visible Improvements
Regional Economic Power Becomes Key Theme in Britain’s Next Political Phase
Britain Expands Support for Small Businesses as Firms Seek Better Access to Finance
UK Economy Remains Central Political Challenge as Cost of Living and Growth Concerns Persist
National Health Service Introduces New Workplace Reviews to Improve Conditions for Healthcare Staff
UK Life Sciences Sector Secures More Than Three Billion Pounds in Investment to Support Innovation
Britain Strengthens Defence Strategy as Security Concerns Reshape Military and Industrial Policy
Andy Burnham Promises Stronger UK Defence Industry and Expanded Domestic Production
UK Government Faces Difficult Spending Choices as Labour Leadership Transition Approaches
Rachel Reeves Warns Andy Burnham of Immediate Economic Challenges After Expected Leadership Change
Andy Burnham Prepares to Lead UK Government With Plans for Regional Power Shift and Economic Reset
Government Creates Emergency Support Scheme for Financially Struggling Universities
United Kingdom Replaces Traditional Farm Subsidies With Payments Linked to Environmental Performance
National Grid Reports First Week of Electricity Generation Without Fossil Fuels
United Kingdom Financial Regulator Introduces Tougher Capital Rules for Cryptocurrency Exchanges
Belfast Harbour Expands Operations to Attract Investment Through United Kingdom and European Union Market Access
Scottish Government Threatens Legal Challenge Over Westminster Cuts to North Sea Transition Funding
United Kingdom Accelerates Trans-Pennine High-Speed Rail Project Linking Northern Cities
United Kingdom Secures Ten Billion Pound Investment for Cambridge Quantum Computing Campus
Port Talbot Steelworks Wins Support for Green Hydrogen Transition and Protection of Industrial Jobs
United Kingdom Sends Royal Navy Carrier Strike Group to Indo-Pacific as Regional Security Focus Expands
×