There is more gloomy news from Germany, where new research for the government predicts the economy will shrink by six per cent this year.
German, Austrian and Swiss economic research institutes compiled a forecast that shows such a shrinkage could cost a further million jobs in 2009, taking the total without work to more than 4-million. But the report endorsed the government’s two stimulus packages. One of the authors, Kai Carstensen from the Munich IFO Institute, said: “The German administration has reacted quickly with a rescue package. The problems in the banking sector have not been resolved yet, and there is the risk of a real credit crunch.” The economists had little hope for a rebound any time soon, saying the German economy will shrink by 1 per cent next year. Indeed, they reckon that last year’s GDP level in the heavily export-reliant economy will not be seen again until 2013.