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Worries about the eurozone came to the fore this week after a poor set of industrial production figures from Germany was swiftly followed by news of a 5.8% fall in its exports, compared with expectations of a 4% decline. The fall was the biggest since January 2009, and showed the effects of the sanctions on Russia over Ukraine, as well as the wider slowdown in the eurozone.

Germany’s economy shrank by 0.2% in the second quarter, so a second consecutive contraction in GDP in the third quarter would tip it into a technical recession. There were reports that the government would next week lower its estimates for GDP growth to 1.2% for both 2014 and 2015, from 1.8% for this year and 2% for next year.

Mario Draghi, the president of the European Central Bank, added to the gloom on Thursday by saying in Washington that the eurozone recovery was running out of steam.

Analysts are nervous that Draghi’s plans to stimulate the flagging eurozone economy with a bond-buying programme have still not been fully implemented and may not be sufficient anyway. Other central banks, notably the US Federal Reserve, have been gradually turning off the money that has been supporting the global markets for the past six years since the global crash which followed the collapse of Lehman Brothers. The prospect of this support ending, and of interest rates rising, had already started to unsettle markets. There was a brief respite from the week’s slide when the minutes of the latest Federal Reserve meeting suggested it was in no rush to raise rates, but this proved short-lived... It becomes clearer by the day that the Eurozone is heading back into crisis - several of the Mediterranean members have never really recovered from the recession of 2009 - unemployment in Greece is 29% whilst youth unemployment in Spain is over 50%. These are depression levels.
Whilst ever Germany insists on continuing with its austerity programme for the EZ, it will languish in low growth/no growth. Now that even Germany is feeling the effect of lack of demand for its exports to the other EZ countries, perhaps some change will occur in policy. If not, then a second crisis for the EZ will spell the political end of the project, with unpredictable results for the European Union overall.