EU Faces Severe Recession as German Industry in Dire Straits

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Europe is facing a “severe recession,” and Germany doesn’t have a source of energy as its industry begins to collapse. Their industry was thriving only months ago. This is a completely manufactured, self-imposed crisis.

Europe will spiral into a severe recession as the shortage in energy supplies is set to spike inflation even higher and weigh heavily on Europe’s GDP, BlackRock said in a note on Monday.

“The energy crunch will drive a recession in Europe, as we’ve argued since March. The crisis has worsened since then as Russia has halted gas supplies,” analysts warned, pointing to the indefinite cutoff of flows from Russia’s Nord Stream 1 pipeline.

Eurozone inflation reached 9.1% in August, causing the European Central Bank to issue its first-ever 75-point rate hike last week to control prices.

That is an economy crusher.

“The European Central Bank isn’t acknowledging how it will crush activity further by trying to fight high inflation, in our view. We think the ECB will wake up to this sooner than markets expect – but not before it inevitably faces a severe recession,” BlackRock said.

Analysts expect it to remain hawkish through the end of the year and said the ECB’s downside scenario of a 0.9% contraction in the economy is looking more likely.

The winter will be tough without Russian oil and gas.

The EU has built up gas reserves to more than 80% of capacity, but they’ve never gone through a winter surviving only on reserves. And what happens after that?

GERMANY CROSSED THE RUBICON?

Moscow’s ambassador in Berlin, Sergey Nechaev, said on Monday that Germany had crossed the Rubicon after decades of reconciliation.

“The very fact that the Ukrainian regime is being supplied with German-made lethal weapons, which are used not only against Russian military service members, but also the civilian population of Donbas, crosses the red line,” Ambassador Sergey Nechaev said in an interview with Izvestia newspaper.

He added that Berlin should have known better, “considering the moral and historic responsibility that Germany has before our people for the Nazi crimes.”

“They have crossed the Rubicon,” Nechaev stated, using an idiom for passing the point of no return.

Germany is the biggest loser in this. They get half their energy from Russia.

GERMAN INDUSTRY IS IN DIRE STRAITS

The biggest challenge the German industrial sector currently faces is posed by rising energy costs, The Economist reported on Sunday, citing the association of German industry BDI.

“The substance of our industry is under threat,” BDI President Siegfried Russwurm said as quoted by the media, adding that the situation was looking “toxic” for many businesses.

According to the association, the electricity price for next year has already increased fifteenfold, and the gas price tenfold. In July, the country’s industry, forced to reduce production capacities, reportedly consumed 21% less gas than in the same month in 2021.

Smaller companies are struggling more than bigger ones, according to a study by the consulting company FTI Andersch, as cited by the media. Some 25% of firms with fewer than 1,000 employees were forced to cancel or decline orders or are planning to do so, compared with 11% of those with over 1,000 employees.

Almost 10,000 bread manufacturers are reportedly struggling as never before in post-war Germany, as the cost of the electricity and gas needed to heat ovens and run kneading machines have increased enormously.

If energy prices remain high for a while, up to 3% of Germany’s energy-intensive businesses will relocate abroad, according to Holger Schmieding, the chief economist of private bank Berenberg.


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GuvGeek
GuvGeek
2 months ago

Europe is facing a “severe recession,”; no Europe is heading for a prolonged Depression that will take us with them! It has been all manufactured by inept Government Bureaucrats and Politicians who now pick and chose the winners and losers in economies with regulations based on political ideologies. Government run centralized economies fail because free market economies can react faster than Governments can.

Last edited 2 months ago by GuvGeek
Peter B. Prange
Peter B. Prange
2 months ago

True or false: “This is a completely manufactured, self-imposed crisis.”
M. Dowling makes the argument. Is she correct?
 
If I understand the point, German government policy on energy did not align with Germany’s international policy. That is a government failure. That makes it self-imposed.
 
Germany has a government that in many ways is a socialist government. That in part means that the government is the controlling economic factor rather than the market. Political policy over rides economic policy. The reserves of energy (e.g. coal, oil, gas, hydroelectric power, etc.) became government policy. If government policies are in conflict with each other, the fault lies with the government. Of course, the Merkel government is gone, so the new government has the problem.
 
M. Dowling is correct, to a point, in laying the crisis at the feet of the government. Its policies have brought the crisis.
 
Joe Biden’s Democrat Party is trying to do the same in the USA. Micro-managing the fuel supply for political purposes and ideology, is now a self-imposed crisis. The answer (in a world he thinks is safe???) use up our energy reserves to cover the political mistake of deliberately decreasing mining/drilling.
 
But how did the European Crisis (especially the German) happen?
 
The Germans got comfortable with their old enemy Russia. During the industrial age, since the time of Napoleon (early 1800’s) Russia has had a love/hate relationship with Western Europe. With détente (yada, yada, yada…) people forgot the lesson of 1938. (Those who do not study/understand history are condemned to repeat the mistakes of the past.)
 
“Peace for our time” was a declaration made by British Prime Minister Neville Chamberlain in his 30 September 1938 remarks in London concerning the Munich Agreement and the subsequent Anglo-German Declaration. The phrase echoed Benjamin Disraeli, who, upon returning from the Congress of Berlin in 1878, had stated, “I have returned from Germany with peace for our time”. The next year, 1 September, 1939 Hitler invaded Poland and the war was on.
 
When Japan and the USA went to war 7 December 1942, some complained we ‘gave’ the Japanese the scrap steel they used to bomb us.
 
President Trump warned Europe about relying on Russian gas. That reliance has now been turned into a weapon.
 
The crisis was self-inflicted.
Never forget who is an enemy or a likely enemy. (Hint – Biden’s dealing with Iran.)
 
Joe Biden’s Democrat Party is trying to do the same in the USA.

The Prisoner
The Prisoner
2 months ago

Germany as the former top economic power in Europe was a big NWO target. When Merkel let in 2 million illegals, military age men, to sponge off the country, and increase crime, while she arrogantly maintained the policy, and it was allowed, the nation was done.

People outside of Europe do not realize how gullible and afraid to speak up Germans are. They are complacent. When they protest this winter, they will receive a sharp reminder of their mistakes when security forces pulverize them. They again become victims of fascism after being taught many years against that. That is just plain stupid.

Sick of it All
Sick of it All
2 months ago

Black Rock talks out of both sides of their mouth. Somehow they convinced ExxonMobil to sell some of their oil fields to China. Why would they comply? The corporations are running things. Check out the documentary titled, MONOPOLY, Who’s running the world.

Last edited 2 months ago by Sick of it All