The euro’s sharp fall to 1.0705 today is all about the US dollar side of the equation but the domestic reasons for selling Europe continue to mount. A big one is the erosion of the German industrial economy. The combination of high energy prices and the rise of Chinese autos is a massive challenge and the government is loath to help.
Reuters sources today report that the government growth forecast for this year will be cut to just 0.2% from 1.3% in October. That’s after a 0.3% contraction in 2023.
The lower forecast isn’t a big surprise to markets as private forecasters are already at low levels but it’s a reminder of the doom-spiral that Germany is stuck in.
Economy Minister Robert Habeck