Recession fears in Germany as economy shrinks 0.3%

Germany has slumped back into 'recessionary territory' as revised figures showed it shrank by 0.3 per cent in the second quarter.

An earlier estimate suggested Europe's largest economy fell by 0.1 per cent between April and June.

However, manufacturing, construction and household spending were weaker than previously thought, raising fears it could suffer another dismal year after shrinking in 2023 and 2024 – with US tariffs piling on further pressure, too.

Carsten Brzeski, at ING Bank, said Germany now looks 'increasingly unlikely' to mount a serious recovery until 2026. The economy welcomed a bounce in the first quarter with GDP growing 0.3 per cent as exports to the US surged in anticipation of fresh tariffs.

But Brzeski said there had been a 'full reversal' of that trend. America was Germany's biggest trading partner last year, with imports and exports totalling £219billion.