Ursula Von der Leyen issued stark warning over future of the Euro as German economy spirals
Ursula Von der Leyen has been issued a stark warning over the future of the Euro as the German economy continues to suffer a downturn
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Ursula Von der Leyen has been issued a stark warning over the future of the Euro as the German economy continues to suffer a downturn.
The Business Europe lobby will today urge political leaders to "put competitiveness at the forefront".
This comes as the finance ministers of countries that have adopted the euro today meet to discuss the economic situation in the eurozone.
They are expected to say: "Europe's declining attractiveness for investment needs to be addressed", warning that "having a strong economy is necessary to defend our European way of life and European interests abroad."
An economist at ING, Carsten Brzeski, warned that Germany appears to be "the sick man of Europe"
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It is expected they will demand the EU makes a change from "five years of rising state intervention in the economy which led to a marked increase in public expenditure".
The German economy shrank in the third quarter of 2023, increasing concerns that the EU's largest economy is heading for a recession.
GDP fell by 0.1 per cent from the previous three months, which is thought to be a result of a drop in household spending.
While the drop in GDP is smaller than the 0.2 per cent drop expected, it is still contributing to concern about the state of the economy.
An economist at ING, Carsten Brzeski, warned that Germany appears to be "the sick man of Europe".
He told the Telegraph: "Cyclical headwinds like the still-unfolding impact of the European Central Bank’s monetary policy tightening and high inflation – plus the stuttering Chinese economy – are being met by structural challenges like the energy transition and shifts in the global economy, alongside a lack of investment in digitalisation, infrastructure and education.
“To a large extent, Germany’s issues are homemade.
"Supply chain frictions in the wake of the pandemic, the war in Ukraine and the energy crisis have only exposed these structural weaknesses.
"These deficiencies are the flipside of fiscal austerity and wrong policy preferences over the last decade."
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She said: "This may result in firms and households becoming less confident and more uncertain about the future, and dampen growth further."
Meanwhile, Marco Valli, chief European economist at UniCredit, told CNBC that the recovery from the economic downturn "will be slow".
Asked if it is going to be an easy year for the Euro, he said: "No, absolutely not".