German economy defies trade gloom with strong growth

The German economy has now grown for 34 of the past 37 quarters, said Carsten Brzeski, an economist at ING in Frankfurt. (Reuters)
Updated 14 August 2018
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German economy defies trade gloom with strong growth

  • Germany’s economy, Europe’s biggest, grew by 0.5 percent compared with the previous three-month period
  • Economists had forecast a 0.4 percent increase this time

BERLIN: The German economy accelerated in the second quarter despite the US move to impose new tariffs on Europe, official data showed Tuesday, performing slightly better than economists had expected.
Germany’s economy, Europe’s biggest, grew by 0.5 percent compared with the previous three-month period. That is up from 0.4 percent in the first quarter — a figure that was revised upward Tuesday from the initial reading of 0.3 percent given in May. Economists had forecast a 0.4 percent increase this time.
Its performance in the April-June period was helped by higher private and government spending and by increased investment in equipment and construction, the Federal Statistical Office said. Rising exports were outpaced by increasing imports.
The figure underlined the German economy’s continuing robust performance, with business confidence high and unemployment low despite some disappointing data on factory orders this year and concern about global trade tensions.
It has now grown for 34 of the past 37 quarters, said Carsten Brzeski, an economist at ING in Frankfurt, but he cautioned that “the challenges facing the German economy will increase rather than decrease.”
Those include the specter of a possible escalation of trade tensions, despite a recent deal to defuse a US-European Union dispute, geopolitical risks such as that posed by events in Turkey and a shortfall in investment and structural reforms at home, he said.
In year-on-year terms, the economy expanded by 2.3 percent in the second quarter.


Rolls-Royce, others still preparing for hard Brexit

Rolls-Royce is continuing with contingency plans as uncertainty grows over whether Prime Minister Theresa May’s Brexit plan will receive backing. (AP Photo/Kin Cheung))
Updated 58 min 49 sec ago
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Rolls-Royce, others still preparing for hard Brexit

LONDON: British aero-engine maker Rolls-Royce said it was continuing with contingency plans as uncertainty grows over whether Prime Minister Theresa May’s Brexit plan will receive parliamentary backing.

“This agreement is only a draft,” CEO Warren East told BBC radio on Friday, joining a line of industry captains urging politicians to be pragmatic and not torpedo an agreement that would allow UK-EU trade to keep flowing.

“We are going to continue with our contingency plans and that includes buffer stocks so that we have all the logistical capacity that we need to carry on running our business.”

Manufacturers such as Rolls-Royce fear new customs duties and red tape could threaten the just-in-time delivery of thousands of parts on which they depend if Britain crashes out of the EU on March 29.

May’s office has released statements from a number of major companies such as Diageo, the London Stock Exchange and Royal Mail in support of her deal.

The British pound clawed back losses as May clung to her Brexit plan, and Britain’s FTSE 100 and FTSE 250 both recovered, rising 0.2 and 0.3 percent respectively after Thursday’s sharp sell-off.

But she is still grappling with the biggest crisis of her premiership following the resignation of key ministers in protest over the draft deal, and faces a tough battle to get it through Parliament if she survives. “The political situation remains uncertain,” German carmaker BMW said
late on Thursday, adding that it would continue to prepare for
the worst-case scenario, which is what a no-deal Brexit would represent.

BMW’s Mini plant in Oxford accounts for 13 percent of Britain’s total car production, with nearly 220,000 cars built there last year.