Germany and France feel the eurozone squeeze

The two largest economies of the single currency see exports fall and growth forecasts reduced

The twin supporting pillars of the eurozone are shaking under the weight of the sovereign debt crisis, new figures suggested yesterday.

German exports fell at their fastest rate in two years in April, according to data from the country's statistics office. They were down 1.7 per cent on March to €90bn (£73bn), worse than the 1 per cent decline analysts expected.

The German economy bounced back strongly in the first quarter of this year, registering growth of 0.5 per cent, helped by surging exports both to the eurozone and emerging markets. Fears are now growing that this source of growth could be evaporating as the eurozone embarks on co-ordinated austerity policies.

The latest trade data showed that German exports to countries in the currency bloc were down 3.6 per cent. This was partially offset by an increase in exports to non-European markets such as China, which rose 10.3 per cent.

"The companies' orders situation has got worse because of the problems in the eurozone. Foreign trade will no longer contribute to growth this year," Stefan Schilbe of HSBC Trinkaus said.

Other indicators have pointed to a recent slowdown in German industry. Both the Ifo and the ZEW sentiment surveys slumped in May. And, in a worrying sign for Germany's struggling European neighbours, imports by the eurozone's dominant economy also fell, dropping by 4.8 per cent on the month to €73.9bn.

Countries with current account deficits, including Spain, Italy and Greece are hoping to turn around their ailing economies by increasing their exports to Germany.

There was also disappointing news for France, the second-largest eurozone economy, yesterday, with the country's central bank reporting that its business sentiment indicator for industry slipped in April. This led it to cut its forecast for the next 12 months. The bank now expects the French economy to shrink by 0.1 per cent in the second quarter of 2012, after previously projecting zero growth.

France will hold the first round of its parliamentary elections tomorrow, with the second round set for the following Sunday. The new Socialist President, François Hollande, needs a strong showing from his party to take control of the lower house, the National Assembly, if he is to enact his election promises to restore strong growth.

The eurozone gloom was compounded yesterday by reports that Spain is preparing, possibly as early as today, to request a bailout from the European Union and the International Monetary Fund to sort out its collapsed banking sector.

Spanish banks are estimated to need at least €40bn in new capital. The country's treasury minister has conceded that the capital markets are "effectively shut" to Spain.

PROMOTED VIDEO
Arts and Entertainment
glastonbury
News
i100
Arts and Entertainment
Shock of the news: Jake Gyllenhaal in ‘Nightcrawler’
filmReview: Gyllenhaal, in one of his finest performances, is funny, engaging and sinister all at once
Life and Style
Taste the difference: Nell Frizzell tucks into a fry-up in Jesse's cafe in east London
food + drinkHow a bike accident left one woman living in a distorted world in which spices smell of old socks and muesli tastes like pork fat
Arts and Entertainment
Kit Harington has been given a huge pay rise to extend his contract as Jon Snow in Game of Thrones
tv
News
ebooksAn unforgettable anthology of contemporary reportage
Arts and Entertainment
Don’t send in the clowns: masks and make-up conceal true facial expressions, thwarting our instinct to read people’s minds through their faces, as seen in ‘It’
filmThis Halloween, we ask what makes Ouija boards, demon dolls, and evil clowns so frightening?
News
peopleFarage challenges 'liberally biased' comedians to 'call him a narcissist'
Arts and Entertainment
Liam and Zayn of One Direction play with a chimpanzee on the set of their new video for 'Steal My Girl'
music
Arts and Entertainment
Young Fathers are the surprise winners of this year's Mercury Music Prize
music
News
i100
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Finance Assistant - Part time - 9 month FTC

£20000 - £23250 Per Annum pro rata: Clearwater People Solutions Ltd: Pro rata ...

Marketing Manager

£40 - 48k + Benefits: Guru Careers: We are seeking a Marketing Manager to join...

Market Risk Manager - Investment Banking - Mandarin Speaker

£45,000 - £65,000: Saxton Leigh: Our client is a well-known APAC Corporate and...

Compensation and Benefits Manager - Brentwood - Circa £60,000

£60000 per annum: Ashdown Group: Compensation and Benefits Manager - Compensat...

Day In a Page

The drugs revolution starts now as MPs agree its high time for change

The drugs revolution starts now as MPs agree its high time for change

Commons debate highlights growing cross-party consensus on softening UK drugs legislation, unchanged for 43 years
The camera is turned on tabloid editors in Richard Peppiatt's 'One Rogue Reporter'

Gotcha! The camera is turned on tabloid editors

Hugh Grant says Richard Peppiatt's 'One Rogue Reporter' documentary will highlight issues raised by Leveson
Fall of the Berlin Wall: It was thanks to Mikhail Gorbachev that this symbol of division fell

Fall of the Berlin Wall

It was thanks to Gorbachev that this symbol of division fell
Halloween 2014: What makes Ouija boards, demon dolls, and evil clowns so frightening?

What makes ouija boards and demon dolls scary?

Ouija boards, demon dolls, evil children and clowns are all classic tropes of horror, and this year’s Halloween releases feature them all. What makes them so frightening, decade after decade?
A safari in modern Britain: Rose Rouse reveals how her four-year tour of Harlesden taught her as much about the UK as it did about NW10

Rose Rouse's safari in modern Britain

Rouse decided to walk and talk with as many different people as possible in her neighbourhood of Harlesden and her experiences have been published in a new book
Welcome to my world of no smell and odd tastes: How a bike accident left one woman living with unwanted food mash-ups

'My world of no smell and odd tastes'

A head injury from a bicycle accident had the surprising effect of robbing Nell Frizzell of two of her senses

Matt Parker is proud of his square roots

The "stand-up mathematician" is using comedy nights to preach maths to big audiences
Frank Warren: Call me an old git, but I just can't see that there's a place for women’s boxing

Frank Warren column

Call me an old git, but I just can't see that there's a place for women’s boxing
Adrian Heath interview: Former Everton striker prepares his Orlando City side for the MLS - and having Kaka in the dressing room

Adrian Heath's American dream...

Former Everton striker prepares his Orlando City side for the MLS - and having Kaka in the dressing room
Simon Hart: Manchester City will rise again but they need to change their attitude

Manchester City will rise again but they need to change their attitude

Manuel Pellegrini’s side are too good to fail and derby allows them to start again, says Simon Hart
Isis in Syria: A general reveals the lack of communication with the US - and his country's awkward relationship with their allies-by-default

A Syrian general speaks

A senior officer of Bashar al-Assad’s regime talks to Robert Fisk about his army’s brutal struggle with Isis, in a dirty war whose challenges include widespread atrocities
‘A bit of a shock...’ Cambridge economist with Glasgow roots becomes Zambia’s acting President

‘A bit of a shock...’ Economist with Glasgow roots becomes Zambia’s acting President

Guy Scott's predecessor, Michael Sata, died in a London hospital this week after a lengthy illness
Fall of the Berlin Wall: History catches up with Erich Honecker - the East German leader who praised the Iron Curtain and claimed it prevented a Third World War

Fall of the Berlin Wall

History catches up with Erich Honecker - the East German leader who praised the Iron Curtain and claimed it prevented a Third World War
How to turn your mobile phone into easy money

Turn your mobile phone into easy money

There are 90 million unused mobiles in the UK, which would be worth £7bn if we cashed them in, says David Crookes
Independent writers remember their Saturday jobs:

Independent writers remember their Saturday jobs

"I have never regarded anything I have done in "the media" as a proper job"