Germany faces recession risk as crisis hits confidence spotlight image

Germany faces recession risk as crisis hits confidence

Press quote (Reuters)
21 December 2011

"Germany won't be able to rely on exports to drive growth and business investment will only hold up if there is a recovery in domestic demand," said Simon Tilford, chief economist at the CER in London.

"So everything hinges on getting domestic demand growing sustainably and there are some formidable obstacles to that." Tilford said Germany should for example hike wages and ease back on fiscal consolidation - unlikely given Berlin is Europe's fiscal hawk. "Germans' outlook is better than much of Europe but the idea Germany is on the cusp of a decade of rapid growth is fanciful," he said. "The outlook for German growth is pretty poor."