German and French Growth is Worse Than Expected
We've seen some disappointing GDP data from the two powerhouses of Europe this morning, with both France and Germany showing that their economies contracted, as expected, in the fourth quarter of 2012.
So it's not just the UK that's on the verge of dipping back into an official recession, but also the other major economies across the Channel.
Unfortunately, the figures have also come in worse-than-expected. France's GDP fell by 0.3%, rather than the 0.2% consensus, and Germany saw a significant fall of 0.6%, as opposed to the consensus of 0.5%.
This has knocked European stock markets
at the start of trade this morning after we had been calling them to open flat ahead of the GDP numbers.
There isn't a huge amount of long-term concern over the figures as the other recent data has suggested that the UK, France and Germany will all avoid another official recession.
The real worry is that the contractions are deeper than expected, so economists and politicians may be deluding themselves as to the current performance of the economy and the shape of the ''recovery''.
In addition, Germany is leading by example and imposing its own austerity measures, so it is a worry for the Eurozone to see them suffer so badly in Q4.
As if that wasn't enough, Japan also missed its growth forecasts overnight and the Bank of Japan kept its monetary policy unchanged.
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By Simon Denham, 14 February 2013