The war in Ukraine has hammered economies across Europe and could tip Germany into recession.
Following a meeting of finance ministers in Brussels, European Commission vice-president Valdis Dombrovskis said that growth in the European Union will be ‘severely impacted’.
‘A recession is becoming increasingly likely,’ said Achim Wambach, president at Germany’s leading economic research institute Zew.
Recession fears: European Commission vice-president Valdis Dombrovskis (pictured) said that growth in the European Union will be ‘severely impacted’ by the war in Ukraine
‘The Ukraine war and the sanctions against Russia are considerably worsening the outlook for Germany.’
The German economy shrank by 0.3 per cent in the final three months of last year.
Covid restrictions and war in Ukraine have left it facing another quarter of contraction at the start of 2022.
That would tip Europe’s biggest economy into recession. War has pushed up already rising food and fuel costs further, intensifying the cost of living crisis sweeping the world.
Christine Lagarde, the president of the European Central Bank, said that the Ukraine crisis would ‘lower growth and raise inflation through higher energy and commodity prices’.
Borrowing costs look set to rise in quick succession on both sides of the Atlantic.
As central banks step up the battle against inflation, the Federal Reserve is widely expected to raise interest rates in the US tonight for the first time in three years.
The move is likely to be followed with a hike by the Bank of England at noon tomorrow in its third increase since December, taking rates to 0.75 per cent.
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