German GDP: at last, a stat that makes UK look good

Schadenfreude. As the cast of Avenue Q sing so admirably, “it’s German for happiness at the misfortune of others”. There may be a touch of it around the Treasury today.

For months, they were told by the likes of the IMF that the UK would suffer the most stinkingly heinous recession of all the world’s advanced nations. Well, how about the figure for German GDP growth this morning?

In the first three months of this year, a contraction of a whopping -3.8 per cent. It’s the largest quarter-on-quarter fall ever recorded in the reunited Germany, in fact, since records began in 1970. It was a total shock to the markets.

It compares with -1.9 per cent for the UK. For the year as a whole the German economy is heading for a fall of 6 per cent, versus around 4 per cent for Britain. The German numbers have poleaxed the numbers for the whole Eurozone too, down 2.5 per cent, quarter-on-quarter.

So, in relative terms, there is some degree of success for Britain. For all that this started out as a FIRE crisis (Finance, Insurance, Real Estate), what happened post-Lehman was nothing short of mind-numbing.

Modern just-in-time production techniques transferred a slump in demand last autumn to the world’s industrialised nations in an instantaneous ripple effect. The German and Japanese economies have been savaged on a scale that is totally unthinkable.

The bullish case here is that the adjustments have been so violent, that, there will be an equally sharp rebound now that stocks of production are depleting. Much depends on demand. But there’s something else too.

The Eurozone countries will have to compete against a plucky neighbour with a cheaper currency. Yes, that’s us. Watch out for more complaints about the cheap pound, even given its recent strengthening.