By Nigel Green, CEO of deVere
The economic data coming out of Germany again makes it clear that the German economy – Europe’s largest – is in a recession.
This could be a long, painful downturn in the European economic powerhouse because there’s no workable monetary policy response in place from the European Central Bank (ECB), nor a serious fiscal one from the German government.
This means the recession will not be a short, sharp one, but is likely to be protracted.
Clearly, this is going to have negative, far-reaching, long-lasting economic consequences across the whole bloc – and they come at a time when other major European economies, such as Italy’s, are also seriously struggling.
Germany and Italy alone account for 40 per cent of the annual economic output of the eurozone.
This grim scenario should be used by Boris Johnson and the UK government to force the EU into making the concessions demanded by London to get a deal done.
A no-deal scenario would be bad for Britain, as is much reported, but it would also be hugely damaging to the EU. The notion that was previously held by European leaders that the eurozone could manage a hard Brexit is vanishing fast.
There’s a growing realisation that the UK crashing out without a deal is likely to be the factor that would send the eurozone into a lengthy recession.
This is a powerful negotiating tool and must be used to full effect by Boris Johnson for the economic good of both the UK and the EU.
A failure by Boris not to play this card this week – and a failure by the EU leaders to put the harsh economic realities over their political pride – would be foolhardy in the extreme and detrimental to the economies of the EU27 and Britain.
We now need our political leaders on both sides of the Channel to try and make something positive – an orderly Brexit – from a sea of negatives.