Germany’s recession is an omen of Europe’s economic decline

The German economy is set to tip back into a technical recession in the first quarter of 2024, according to the Bundesbank. This means it will continue to shrink in the first three months of this year – after contracting last year and registering as the worst-performing major economy in the world.

A technical recession is ‘technical’ in the sense that it follows a pretty arbitrary rule of thumb used by economists to identify when an economy is in decline. It was once useful for indicating serious and shocking problems in an economy, but since western economies entered a period of deep stagnation at the turn of the decade it has simply become a hallmark of our new economic age.

Looking at the components of the German economy, there is no good news whatsoever. Consumption is either flat or going down. Investment is in decline. Both imports and exports are falling, but since imports are decreasing faster than exports this is propping up the GDP numbers.