London Daily

Focus on the big picture.
Thursday, Dec 25, 2025

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
UK Mortgage Rates Edge Lower as Bank of England Base Rate Cut Filters Through Lending Market
U.S. Supermarket Gives Customers Free Groceries for Christmas After Computer Glitch
Air India ‘Finds’ a Plane That Vanished 13 Years Ago
Caviar and Foie Gras? China Is Becoming a Luxury Food Powerhouse
Hong Kong Climbs to Second Globally in 2025 Tourism Rankings Behind Bangkok
From Sunniest Year on Record to Terror Plots and Sports Triumphs: The UK’s Defining Stories of 2025
Greta Thunberg Released on Bail After Arrest at London Pro-Palestinian Demonstration
Banksy Unveils New Winter Mural in London Amid Festive Season Excitement
UK Households Face Rising Financial Strain as Tax Increases Bite and Growth Loses Momentum
UK Government Approves Universal Studios Theme Park in Bedford Poised to Rival Disneyland Paris
UK Gambling Shares Slide as Traders Respond to Steep Tax Rises and Sector Uncertainty
Starmer and Trump Coordinate on Ukraine Peace Efforts in Latest Diplomatic Call
The Pilot Barricaded Himself in the Cockpit and Refused to Take Off: "We Are Not Leaving Until I Receive My Salary"
UK Fashion Label LK Bennett Pursues Accelerated Sale Amid Financial Struggles
U.S. Government Warns UK Over Free Speech in Pro-Life Campaigner Prosecution
Newly Released Files Shed Light on Jeffrey Epstein’s Extensive Links to the United Kingdom
Prince William and Prince George Volunteer Together at UK Homelessness Charity
UK Police Arrest Protesters Chanting ‘Globalise the Intifada’ as Authorities Recalibrate Free Speech Enforcement
Scambodia: The World Owes Thailand’s Military a Profound Debt of Gratitude
Women in Partial Nudity — and Bill Clinton in a Dress and Heels: The Images Revealed in the “Epstein Files”
US Envoy Witkoff to Convene Security Advisers from Ukraine, UK, France and Germany in Miami as Peace Efforts Intensify
UK Retailers Report Sharp Pre-Christmas Sales Decline and Weak Outlook, CBI Survey Shows
UK Government Rejects Use of Frozen Russian Assets to Fund Aid for Ukraine
UK Financial Conduct Authority Opens Formal Investigation into WH Smith After Accounting Errors
UK Issues Final Ultimatum to Roman Abramovich Over £2.5bn Chelsea Sale Funds for Ukraine
Rare Pink Fog Sweeps Across Parts of the UK as Met Office Warns of Poor Visibility
UK Police Pledge ‘More Assertive’ Enforcement to Tackle Antisemitism at Protests
UK Police Warn They Will Arrest Protesters Chanting ‘Globalise the Intifada’
Trump Files $10 Billion Defamation Lawsuit Against BBC as Broadcaster Pledges Legal Defence
UK Says U.S. Tech Deal Talks Still Active Despite Washington’s Suspension of Prosperity Pact
UK Mortgage Rules to Give Greater Flexibility to Borrowers With Irregular Incomes
UK Treasury Moves to Position Britain as Leading Global Hub for Crypto Firms
U.S. Freezes £31 Billion Tech Prosperity Deal With Britain Amid Trade Dispute
Prince Harry and Meghan’s Potential UK Return Gains New Momentum Amid Security Review and Royal Dialogue
Zelensky Opens High-Stakes Peace Talks in Berlin with Trump Envoy and European Leaders
Historical Reflections on Press Freedom Emerge Amid Debate Over Trump’s Media Policies
UK Boosts Protection for Jewish Communities After Sydney Hanukkah Attack
UK Government Declines to Comment After ICC Prosecutor Alleges Britain Threatened to Defund Court Over Israel Arrest Warrant
Apple Shutters All Retail Stores in the United Kingdom Under New National COVID-19 Lockdown
US–UK Technology Partnership Strains as Key Trade Disagreements Emerge
UK Police Confirm No Further Action Over Allegation That Andrew Asked Bodyguard to Investigate Virginia Giuffre
Giuffre Family Expresses Deep Disappointment as UK Police Decline New Inquiry Into Andrew Mountbatten-Windsor Claims
Transatlantic Trade Ambitions Hit a Snag as UK–US Deal Faces Emerging Challenges
Ex-ICC Prosecutor Alleges UK Threatened to Withdraw Funding Over Netanyahu Arrest Warrant Bid
UK Disciplinary Tribunal Clears Carter-Ruck Lawyer of Misconduct in OneCoin Case
‘Pink Ladies’ Emerge as Prominent Face of UK Anti-Immigration Protests
Nigel Farage Says Reform UK Has Become Britain’s Largest Party as Labour Membership Falls Sharply
Google DeepMind and UK Government Launch First Automated AI Lab to Accelerate Scientific Discovery
UK Economy Falters Ahead of Budget as Growth Contracts and Confidence Wanes
Australia Approves Increased Foreign Stake in Strategic Defence Shipbuilder
×