Euro falls to 20 year low, Eurozone economy in “sharp deterioration”

Euro drops another 1.65% in one day - approaching worst level since launch in 1999

Montage © Facts4EU.Org 2022

Germany suffers first negative trade balance in 30 years

Whilst the BBC and Sky News focus on the travails of the Prime Minister, the EU is going through woes of its own.

Whilst they are always keen to report on negative economic news from the UK, British broadcasters might like to take a look at what’s happening on the other side of the English Channel. In the absence of them doing this, Facts4EU.Org thought readers might wish to see how bad things are getting ‘over there’.

Brexit Facts4EU.Org Summary

The EU's economic woes continue

The Euro continues to fall against the US Dollar and is heading for parity
Worst performance since it was founded in 1999
Eurozone economy looks to be headed for recession, says S&P Global
EU’s powerhouse economy – Germany – posts first negative trade balance in 30 years

[Sources: ECB, S&P Global, Germany's statistics agency.]

1. The Euro continues to tumble

According to the European Central Bank’s official figures, the Euro has now fallen 13.1% in the last 12 months. Taking just the last five months, the Euro has fallen in value by 10.1%.

Currency markets can be volatile but there is no doubting the downward trend.

2. Economic confidence in Eurozone continues to fall

The Eurozone Composite PMI® (Purchasing Managers' Index®) is produced by S&P Global and is based on original survey data collected from a representative panel of around 5,000 manufacturing and services firms.

It is a highly respected and up-to-date measure of business confidence and expectations in the Eurozone. And the news issued yesterday is not good. Here is Chris Williamson, Chief Business Economist at S&P Global Market Intelligence.

Respected economic forecast for the Eurozone

“The sharp deterioration in the rate of growth of eurozone business activity raises the risk of the region slipping into economic decline in the third quarter. The June PMI reading is indicative of quarterly GDP growth moderating to just 0.2%, with forward-looking indicators such as the survey’s new orders and business expectations gauges pointing to falling output in coming months.
“The manufacturing sector is already in decline, for the first time in two years, and the service sector has suffered a marked loss of growth momentum amid the cost of living crisis. Household spending on non-essential goods and services has come under particular pressure due to soaring prices but business spending and investment is also waning in response to the gloomier outlook and tightening financial conditions.”
- Chris Williamson, Chief Business Economist at S&P Global Market Intelligence, 04 Jul 2022

3. Germany records worst trade balance in 30 years

Finally, are the wheels coming off Germany’s Mercedes?

One of the many official sources we monitor is Germany’s official statistics agency. On Monday they produced their latest trade figures for May. These show a trade deficit for the first time in 30 years.

Germany has always run a strong trade surplus – and still does with the rest of the EU – but its trade surplus with the rest of the world has deteriorated. It’s overall trade deficit was 0.5%. That might not sound much but these things are relative.

And out of interest for British readers, Germany’s exports to the UK fell by 2.5%. This compares with Germany’s sales to Putin’s Russia, which actually rose by an astonishing 29.4% - despite the EU's sanctions.

Observations

Self-fulfilling prophecies, the BBC, and the reality of the Eurozone's problems

When the British people voted to leave the European Union, the UK and world Establishments predicted dire consequences for the UK economy. As we all now know, these never materialised, with the exception of a sudden fall in the value of Sterling.

This was hardly surprising, given that the international currency traders had been fed the negative propaganda from organisations such as the pro-EU OECD, IMF, etc., always parroted by the equally pro-EU BBC. To mix our metaphors, monkey see, monkey do.

What we have shown above is the fall in the value of the Euro. We used the default chart from the European Central Bank itself, so that we can’t be accused of ‘manipulating’ data, as we so often are by those who believe in rejoining the EU. It shows just how much the Euro has been falling over the past 12 months – long before Putin’s illegal invasion of Ukraine and the spike in energy prices.

Deutschland

Germany sold less to the UK in May, dropping 2.5% in value. It’s okay though, because Germany made up for this by selling almost 30% more to Putin’s Russia – despite the EU’s supposed trade sanctions...

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[ Sources: ECB | S&P Global | Germany's statistics agency ] Politicians and journalists can contact us for details, as ever.

Brexit Facts4EU.Org, Wed 06 July 2022

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Reader Comments 6

1. Fred Dawson , Wednesday, July 06, 2022, 08:12:

Germany?...funding tyranny by financing Putin's war and the EU turns a blind eye.

2. Have You Wondered , Wednesday, July 06, 2022, 09:25:

'Facts4EU.Org thought readers might wish to see how bad things are getting ‘over there’.'
.
Have You Wondered - for the sake of balance - should there be comparisons with the UK £ using the same criteria?
.
Perhaps I'm a bit sensative but whilst a fan of Facts4eu i do increasingly have concerns over the journalistic un-professional comments.
i.e. 'To mix our metaphors, monkey see, monkey do.'. There have previously been others to which I have communicated to the editors.
.
I think it very important that Facts4EU.Org do all possible to refrain from derogatory comment and avoid the critisism fired by opposing factions?
.

3. KB , Wednesday, July 06, 2022, 11:28:

Have You Wondered (2) Yes I agree.
The problem with today's article is that it is so easily shot down in flames by the other side.
Yes the €/$ rate is at a record low but at the same time the £ has depreciated against the €.
So the £/$ rate trend is even worse. This is the first thing a remainer will say when presented with today's article.

4. Neil Blunt , Wednesday, July 06, 2022, 13:00:

Are we still blaming Brexit? Or has it changed to Putin?

5. jon livesey , Wednesday, July 06, 2022, 14:48:

Germany will probably try to address a trade deficit with austerity and curbs on wage rises, which German unions will agree to if it is a trade-off wiih job losses. Then Germany will become more competitive versus the periphery, which will allow wage rises and so become less competitive. Then divergence in the euro debt market will return, and the ECB will impose austerity on the periphery whether they like it or not leading to less long-term investment. Then German companies will cut their costs by buying more factories in the EU outside Germany. Then we will hear that the problem has been "fixed".

6. jon livesey , Wednesday, July 06, 2022, 17:17:

People still view exchange rates as some kind of morality play, with high good and low bad, as if it's a kind of national soccer score. What is really going on in foreign exchange at the moment is the the Dollar is very high and rising against all other major currencies, and the exchange rate between those other currencies are just details. The reason the Dollar is so high probably does not have much to do with trade performance - the US runs a higher current account deficit as a percentage of GDP than the UK does - but the so-called flight to safety. This is when investors buy what they perceive to be the safest debt and sell the less safe, and to do that they have to buy the currency in which the safest debt is issued, and right now that happens to be the US.
If yo9u want something startling to think about, how does Germany manage to run a trade deficit when the euro is a cheaper currency than the DMark would have been and when the euro itself is so low against the Dollar, not to mention that Germany is having trouble importing as much energy as it wants. In other words, not where exchange rates are, but why they are not having the effect you would expect.
Exchange rates themselves are interesting in a sixties tabloid-ish sort of way, but in Germany society is based on a trade-off between jobs and wages, and German unemployment is already higher than the UK, at 5.3% versus 3.8%. Add job losses in export industries and things could get interesting. The whole issue of sanctions on Russia, a major German export market, could become a subject of conflict between Germany and the rest of the West.

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