Slowdown in Germany adds to eurozone's woes

Growth in the German economy all but ground to a halt between April and June, official data revealed yesterday, deepening the crisis in the debt-laden eurozone. The German statistics office said the bloc's largest economy expanded by just 0.1 per cent in the second quarter. It also warned that growth between January and March was lower than previously thought – 1.3 per cent against its initial estimate of 1.5 per cent.

The grim figures add to fears that the world economy is slowing, compounding the challenge faced by governments already burdened with large debt piles. In Europe, leaders need to cut borrowing to placate increasingly restless bond markets, while ensuring that austerity measures are not so deep as to choke off the recovery.

Germany, the world's fourth biggest economy, had seemed to be striking that balance, performing strongly since the 2008 financial crisis. Aconsistent slowdown could imperil the recovery prospects of the entire eurozone and damage global growth.

Data from France last week showed that the Continent's second largest economy also stagnated in the second quarter. The slowing pistons in the region's main economic engines mean that the eurozone as a whole grew by just 0.2 per cent between April and June, well below the 0.8 per cent expansion seen in the first three months of the year, according to Eurostat, the EU statistics body.

In annual terms, the eurozone expanded by 1.7 per cent, compared with 2.5 per cent in the first quarter. Ken Wattret of BNP Paribas said: "The main theme is the weakness of the core countries – Germany and France performed much less well than anticipated in the second quarter and that is quite worrying."