Germany, UK defying forecasts may skirt recessions for now | The Business Standard
Skip to main content
  • Latest
  • Economy
    • Banking
    • Stocks
    • Industry
    • Analysis
    • Bazaar
    • RMG
    • Corporates
    • Aviation
  • Videos
    • TBS Today
    • TBS Stories
    • TBS World
    • News of the day
    • TBS Programs
    • Podcast
    • Editor's Pick
  • World+Biz
  • Features
    • Panorama
    • The Big Picture
    • Pursuit
    • Habitat
    • Thoughts
    • Splash
    • Mode
    • Tech
    • Explorer
    • Brands
    • In Focus
    • Book Review
    • Earth
    • Food
    • Luxury
    • Wheels
  • More
    • Sports
    • TBS Graduates
    • Bangladesh
    • Supplement
    • Infograph
    • Archive
    • Gallery
    • Long Read
    • Interviews
    • Offbeat
    • Magazine
    • Climate Change
    • Health
    • Cartoons
  • বাংলা
The Business Standard

Sunday
June 15, 2025

Sign In
Subscribe
  • Latest
  • Economy
    • Banking
    • Stocks
    • Industry
    • Analysis
    • Bazaar
    • RMG
    • Corporates
    • Aviation
  • Videos
    • TBS Today
    • TBS Stories
    • TBS World
    • News of the day
    • TBS Programs
    • Podcast
    • Editor's Pick
  • World+Biz
  • Features
    • Panorama
    • The Big Picture
    • Pursuit
    • Habitat
    • Thoughts
    • Splash
    • Mode
    • Tech
    • Explorer
    • Brands
    • In Focus
    • Book Review
    • Earth
    • Food
    • Luxury
    • Wheels
  • More
    • Sports
    • TBS Graduates
    • Bangladesh
    • Supplement
    • Infograph
    • Archive
    • Gallery
    • Long Read
    • Interviews
    • Offbeat
    • Magazine
    • Climate Change
    • Health
    • Cartoons
  • বাংলা
SUNDAY, JUNE 15, 2025
Germany, UK defying forecasts may skirt recessions for now

Bloomberg Special

Craig Stirling & Jana Randow; Bloomberg
14 January, 2023, 09:45 am
Last modified: 14 January, 2023, 09:56 am

Related News

  • Goldman Sachs cuts US recession odds to 35% from 45% on trade truce optimism
  • Euro dips as markets brace for post-election gridlock in France
  • In heated debate, Britain's Sunak, Starmer go head-to-head on the economy
  • UK recession might be under way after economy shrinks in Q3
  • Big UK inflation drop bolsters bets on Bank of England cuts next year

Germany, UK defying forecasts may skirt recessions for now

Craig Stirling & Jana Randow; Bloomberg
14 January, 2023, 09:45 am
Last modified: 14 January, 2023, 09:56 am
Shoppers in a retail street in Frankfurt, Germany. Photographer: Ben Kilb/Bloomberg
Shoppers in a retail street in Frankfurt, Germany. Photographer: Ben Kilb/Bloomberg

Europe's two biggest economies may have succeeded in skirting a recession in the fourth quarter, defying downbeat expectations and offering hope of similar feats throughout the advanced world.

Consumer-fueled momentum buoyed both Germany and the UK, according to official estimates of gross domestic product released Friday. 

Officials in Berlin suggested the euro zone's motor probably stagnated in the quarter, while British data for November showed output rose unexpectedly by 0.1%.

The Business Standard Google News Keep updated, follow The Business Standard's Google news channel

With both economies labeled just weeks ago by the OECD as this year's likely laggards within the Group of Seven, generous subsidies for energy bills are cushioning households against the worst cost-of-living crisis in a generation. It raises the possibility of a soft landing for the world economy.

Further reasons for hope come from China's emergence from Covid-19 lockdowns and warmer weather in Europe, which is reducing energy demand and reliance on Russia for supplies.

At the same time, there's a danger that inflation stoked by stronger demand could persist. That would complicate decision making by central banks from the US to the euro zone, which are struggling to decide how much further interest rates need to rise to quell price pressures. 

"Germany and the UK are very much in the same situation — high inflation meets generous fiscal support and an economy saved by the weather," said Carsten Brzeski, head of macro at ING in Frankfurt. Still, "while the data offer some hope that the crisis won't be as bad as feared, I'm struggling to think of 2023 as a year where everything will be just fine."

As recently as November, the European Commission was forecasting that Germany was succumbing to the deepest recession in the euro region, which itself was predicted to mildly contract during the fourth and first quarters.

The UK, according to its officials, was already in the midst of an even more severe slump — a projection shared by the Bank of England.

Instead, both economies are showing unexpected resilience. Germany — whose initial and tentative fourth-quarter assessment by statisticians is the first for any G-7 country so far — expanded 1.9% in 2022 as a whole. That's more than the 1.8% median prediction of economists.

Britain, meanwhile, showed a second consecutive month of expansion, an outcome foreseen by only one forecaster among 32 polled. 

While different narratives affect each country, not least since the UK's exit from the European Union in 2020, the unifying theme in each is the continuation of wholesale support to consumers to weather the cost-of-living squeeze.

"The UK is definitely holding up better than everyone thought a few months ago," said James Smith, developed markets economist at ING. He pointed to the cap on energy bills as freeing up spending capacity for households. 

In Germany, disposable income in 2022 posted a record increase, aided by Chancellor Olaf Scholz's coalition. Ministers offered a tax break on bonuses, and most emphatically they ensured that gas bills in December were bankrolled by the public purse. 

'Incredibly Robust'

"Private consumption was incredibly robust in the fourth quarter," said Andreas Scheuerle, an economist at Dekabank. "Industry has also been stronger than expected, with carmakers playing no small role."

In the UK, the reversal of a tax rise on payrolls is likely to have brought a similar fillip to disposable incomes, with Prime Minister Rishi Sunak's government trying both to fight inflation and cushion consumers from rising energy bills. World Cup football matches also boosted consumer-facing businesses and helped offset the impact of strikes, statisticians said.  

"We're in the process of digesting the big shocks of the past year, and we've made good progress in learning to cope with higher energy costs," said Holger Schmieding, chief economist at Berenberg in London. "With inflation past the peak, the situation is improving — the recession in the UK will be milder, and Germany may avoid it entirely with a bit of luck."

The unexpected buoyancy in each economy may yet prove fleeting — not least if the current respite in energy prices reverses as China reopens. While natural gas prices in Europe have fallen in recent weeks, they remain about five times higher than in the US or the levels before the pandemic. 

Equally, the threat that growth resilience may drive more inflation can't be discounted. Annual price gains in both Britain and Germany are about 10%. 

For the European Central Bank and BOE, whose first decisions of the year are on Feb. 2, the silver lining of a canceled recession may still be overshadowed by the cloud of inflation. 

Euro-zone policy makers are seen likely to keep raising interest rates aggressively, with a half-point move anticipated. Friday's figures may strengthen calls for further increases in borrowing costs in the UK, too.

Meanwhile, one quarter of good news on growth could well also turn out to be short-lived, according to ING's Brzeski.

"Consumers haven't seen the worst of the gas-price increase, factories will start to feel last year's decline in orders eventually, and the tailwinds of post-pandemic catch-up spending will recede," he said.


Disclaimer: This article first appeared on Bloomberg, and is published by special syndication arrangement

Top News / World+Biz / Europe / Global Economy

Europe economy / Germany Economy / UK economy / Recession fears

Comments

While most comments will be posted if they are on-topic and not abusive, moderation decisions are subjective. Published comments are readers’ own views and The Business Standard does not endorse any of the readers’ comments.

Top Stories

  • Representational image. File photo: TBS
    Chattogram Port proposes 70%-100% tariff hike
  • Benjamin Netanyahu in a video-message on 14 June. Photo: Collected
    Israel says attacks on Iran are nothing compared with what is coming
  • Police stand at a crime scene as they searched for a suspect posing as a police officer who shot two Democratic state lawmakers and their spouses in their homes, in the Minneapolis suburb of Champlin, Minnesota, U.S. June 14, 2025 in a still image from video. ABC Affiliate KTSP via REUTERS
    Manhunt underway after Minnesota lawmaker, her husband killed in 'politically motivated' attack

MOST VIEWED

  • Energy adviser Fouzul Kabir Khan with other government officials during a visit to Sylhet gas field on 13 June 2025. Photo: TBS
    I would disconnect gas supply to every home in Dhaka if I could: Energy adviser
  • Infographic: TBS
    Govt plans incentives for Bangladeshis bringing in foreign investment
  • Tour operator Borsha Islam. Photo: Collected
    ‘Tour Expert’ admin Borsha Islam arrested over Bandarban tourist deaths
  • BNP Acting Chairperson Tarique Rahman and Chief Adviser  Muhammad Yunus meet at Dorchester Hotel in London, UK on 13 June 2025. Photo: CA Press Wing
    National polls possible in 2nd week of February, agree Yunus, Tarique in 'historic' London meeting
  • Infographics: TBS
    220MW solar power plant planned in Feni
  • Rescuers work at the scene of a damaged building in the aftermath of Israeli strikes, in Tehran, Iran, June 13, 2025. Majid Asgaripour/WANA (West Asia News Agency) via REUTERS
    Tehran retaliates with 100 drones after Israel strikes Iran's nuclear facilities, kills military leaders

Related News

  • Goldman Sachs cuts US recession odds to 35% from 45% on trade truce optimism
  • Euro dips as markets brace for post-election gridlock in France
  • In heated debate, Britain's Sunak, Starmer go head-to-head on the economy
  • UK recession might be under way after economy shrinks in Q3
  • Big UK inflation drop bolsters bets on Bank of England cuts next year

Features

Photos: Collected

Kurtis that make a great office wear

1d | Mode
Among pet birds in the country, lovebirds are the most common, and they are also the most numerous in the haat. Photo: Junayet Rashel

Where feathers meet fortune: How a small pigeon stall became Dhaka’s premiere bird market

3d | Panorama
Illustration: Duniya Jahan/ TBS

Forget Katy Perry, here’s Bangladesh’s Ruthba Yasmin shooting for the moon

4d | Features
File photo of Eid holidaymakers returning to the capital from their country homes/Rajib Dhar

Dhaka: The city we never want to return to, but always do

5d | Features

More Videos from TBS

Which major powers align with whom in the Israel-Iran conflict?

Which major powers align with whom in the Israel-Iran conflict?

1h | Podcast
Israeli attack: Will Iran be inclined to develop nuclear weapons?

Israeli attack: Will Iran be inclined to develop nuclear weapons?

1h | Others
Why Did Israel Use Hellfire Missiles in the Iran Attack?

Why Did Israel Use Hellfire Missiles in the Iran Attack?

2h | Others
Beach Sand Tragedy: Negligence or Natural Disaster?

Beach Sand Tragedy: Negligence or Natural Disaster?

3h | TBS Stories
EMAIL US
contact@tbsnews.net
FOLLOW US
WHATSAPP
+880 1847416158
The Business Standard
  • About Us
  • Contact us
  • Sitemap
  • Advertisement
  • Privacy Policy
  • Comment Policy
Copyright © 2025
The Business Standard All rights reserved
Technical Partner: RSI Lab

Contact Us

The Business Standard

Main Office -4/A, Eskaton Garden, Dhaka- 1000

Phone: +8801847 416158 - 59

Send Opinion articles to - oped.tbs@gmail.com

For advertisement- sales@tbsnews.net