For the first time in four months, the economy of the German private sector has unexpectedly plummeted. As in the UK, concerns about Trump’s tariffs have led to a sharp decline in activity in the services sector. In April, the aggregate PMI of S&P Global, Europe’s largest economy, fell to 49.7 from 51.3 in the previous month, falling below the 50-point threshold separating growth from contraction and well below the 50.5 expected by experts.
According to S&P, concerns about the economic and political outlook are forcing Germans to postpone major spending. “Things are not going well for service providers – activity is declining and optimism about the future of the business is fading,” said Cyrus de la Rubia, an economist at Hamburg Commercial Bank.
The negative surprise further strengthens the gloomy outlook for the German economy, which is considered particularly vulnerable to global trade tensions. Yesterday, the International Monetary Fund lowered its forecasts for Germany, predicting stagnation for this year. However, in January, it predicted a growth of 0.3 percent.
Bundesbank President Joachim Nagel gives an even more pessimistic forecast. He believes that Germany is threatened with a recession this year due to the impact of US tariffs. “Europe is in a state of stagnation.” There may be a recession in my country, Germany,” he said today.
The UK’s private sector has suffered its biggest downturn in more than two years. The decline was driven by US President Donald Trump’s tariffs, which reduced overseas orders and raised fears of a recession. In particular, the S&P Global Credit Rating Purchasing Managers’ Index (PMI) fell to 48.2 points in April, steep from 51.5 in the previous month. This is worse than forecast by economists, who expected growth to be only 50.4 percent and below the 50 threshold separating growth from contraction.
The latest estimates are the worst since Liz Truss’s “disastrous” premiership in 2022, undermining hopes that the UK economy will pick up after stagnation in recent years. “Anecdotal evidence suggests that uncertainty about U.S. tariffs and general concerns about the economic outlook have prompted customers to delay making important spending decisions,” S&P said in a statement.
In light of this, it turned out that Britain’s loan debt exceeded the official forecasts of less than a month ago, which indicates the uncertain state of public finances. According to data from the Office for Statistics, the UK’s budget deficit in the 2024/25 financial year was £151.9 billion ($202 billion). This is more than the £137.3 billion forecast by the Office for Fiscal Responsibility. Last month alone, the deficit was £16.4 billion, while economists were expecting an average of £15.8 billion.
Übersetzt und bearbeitet von Hans Seckler