Europe is facing a an economic slowdown with two of its largest economies already on the brink of recession according the recent release of statistics report by Eurostat which is EU’s central agency for handling economic statistics. With US- China trade war and consequent slowdown in China the world’s second largest economy, the European as well as the global economy have shown signs of deep trouble.
A slowdown in China’s automotive market has already threatened revenues of many European automakers who draw massive revenues from the Asian giant, forcing many to enter partnerships and job cuts to balance the rapidly dwindling profits. A recent report released by Standard Chartered Bank has found that United States is going to lose its status of the biggest economy in the world by 2020 replaced by China, and may never get that title back again as Asian economies move ahead in the race.
Economists, policymakers and investors observing the global economy fear that a major economic crisis is in the process of making. Eurostat reveled on Monday that between October to November last year industrial production fell by over 1.7%. The data signaled that the European Union’s economy is growing but at a laggardly pace. It said that although Eurozone GDP increased by a small amount in the fourth but slowed down by a gear; however there is no reasonable evidence to predict a sharp rebound in 2019.
Germany, usually the star performer in European Union reported a decline in industrial production by 1.9% in November 2018, while the year-on-year production reached a low of -4.6%, which is the biggest slowdown since 2008 financial crisis. Exports in November fell to -0.4%. Manufacturing being the key driver of German economy, any slowdown in manufacturing is reverberated across the whole economy. The slowdown is credited to the plunging profits of German automotive giants in the shifting landscape of adopting to electric cars and tougher emission standards simultaneously. EU’s ambition to reduce greenhouse gas emissions by 30% is putting a heavy blow to automobile industry.
Italian manufacturing has also slumped down with evidence from official government data showing negative trends at the end of 2018. The Italian government is highly Eurosceptic and volatile. The French government seems has a lot to deal with lately with Gilets Jaune protests escalating everyday along with an economic slowdown. France’s GDP, third largest in Europe is expected to be halved by 0.2% from 0.4% in the last quarter, thanks to the belligerent yellow vest protests. The protests which started in November 2018 have already cost retailers a whopping $1 billion and more.
Although slowdown in German economy continues, the UK based staffing and human resources firm Hays has reported an 8% rise in net fees, contributed hugely by the 15% rise in payments from Germany. The numbers indicate a strong hiring in Germany but it has to be noted that the firm largely deals with white collar jobs rather than factory ones. All major automakers including Jaguar, Ford and Volkswagen have recently announced major plant closures with thousands of job cuts. This has raised alarming bells in Europe and worldwide.