London Daily

Focus on the big picture.
Saturday, Sep 12, 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
Chinese Crypto Entrepreneur Leon Li Identified as Seller of £190 Million London Mansion
Trades Union Congress Proposes Social Energy Tariff Funded by Higher Bank Surcharge
British Chambers of Commerce Calls for State Pension Triple Lock to Be Scrapped
Anthropic Says Claude Helped Disrupt Biological Weapons and Cyber Espionage Threats
UK Imposes Sanctions Over Israeli Settlements and West Bank Violence
UK Reimposes Sectoral Sanctions on Iran’s Aviation, Shipping and Energy Networks
UK Economy Grows 0.4% in July as AI and Programming Services Lift Activity
UK House of Commons Rejects Assisted Dying Bill by 286 Votes to 270
UK Reviews Nationwide Emergency Alert Tests After Systems Meet Reliability Targets
UK Seeks Faster Rail Links Across Northern Industrial Corridors
British Business Bank Allocates £150 Million for High-Growth Companies in Northern England
BBC Warns Staff Strikes Are Possible Amid Pay Dispute and £500 Million Savings Drive
UK Backs Short Extension of UN Sudan Sanctions Regime
Prime Minister Andy Burnham Defends Early Prison Release Reforms and Growth Strategy
Reform UK Faces Scrutiny Over Alleged Effort to Circumvent Foreign Donation Rules
UK Analysts Warn Tax Rises or Spending Cuts May Be Needed to Preserve Fiscal Headroom
Jaguar Land Rover Plans Up to 4,000 Job Cuts in £1.7 Billion Cost-Saving Drive
UK Chancellor Warns of Difficult October Budget as Borrowing Costs Rise
UK Declares Israeli Occupation of West Bank Unlawful and Expands Sanctions
UK House of Commons Rejects Assisted Dying Bill for England and Wales
English Councils to Gain Power to Introduce Tourist Taxes by 2028
Kemi Badenoch Reshuffles Conservative Shadow Cabinet
Firefighters Make Progress Containing Major Wildfires in South Wales
John Lewis Partnership Reports £124 Million Loss
Study Says UK AI Data Centres Will Create Only a Quarter of Forecast Jobs
UK Government Considers Higher Industrial Water Prices Amid Supply Pressures
Andy Burnham Holds First Call With Donald Trump as UK Prime Minister
NHS Records Busiest Summer on Record as Heatwaves Drive Hospital Admissions
Home Secretary Orders Police Crackdown on Far-Right Anti-Migrant Vigilantes
UK Supreme Court Rules Northern Ireland Religious Education Curriculum Breaches Human Rights Standards
Markets Price in Four Bank of England Rate Rises by Next Summer
House of Commons Prepares Free Vote on Assisted Dying Bill
UK Government Bans Trade With Israeli Settlements in Occupied Territories
UK Economy Grows 0.4% in July as Artificial Intelligence Investment Supports Expansion
Andy Burnham Becomes UK Prime Minister After Keir Starmer Resigns
John Lewis Partnership Loss Widens to £124 Million
UK Government to Put White Working-Class Social Mobility at Centre of Equality Policy
McLaren Plans £450 Million Technology Investment Creating 1,000 UK Jobs
UK Chancellor Faces Calls for Wealth Taxes and Public Ownership in Autumn Budget
English Mayors to Gain Powers to Impose Uncapped Overnight Tourist Taxes
JPMorgan’s Jamie Dimon Warns UK Government Against Bank Windfall Taxes
UK Air Traffic Control Outage Cancels More Than 2,000 Flights
UK Imposes Trade Ban on Israeli Settlements in the West Bank
UK Borrowing Costs Surge as Middle East Tensions Push Long-Term Gilt Yields to Highest Since 1998
Buckingham Palace Says Prince Harry and Meghan Will Not Resume Official Royal Duties
UK Treasury Faces Calls to Scrap £100,000 Childcare Support Threshold
Trades Union Congress Urges Labour Government to Rewrite Migration Policy
Riot Police Deployed After Anti-Migrant Protests Turn Violent in Portsmouth
UK Considers Replacing Some Disability Cash Payments With Direct Services
JPMorgan’s Jamie Dimon Warns UK Chancellor Against Higher Banking Taxes
×