Germany on brink of recession as economy shrinks; central banks may raise interest rates to 15-year highs this week – business live

Key events

Back in the City, shares in gambing group 888 Holdings are now down 27% after it announced the departure of its CEO and the suspension of VIP services in the Middle East following an investigation into suspected money laundering (see earlier post for details).

888 are the top faller on the FTSE 250 index of medium-sized firms, at the lowest level since the pandemic crash of March 2020.

They’re followed by cybersecurity firm Darktrace, which are down 15% today.

Global carbon emissions are expected to fall quicker than previously expected as a result of the war in Ukraine and Joe Biden’s efforts to encourage green investment, BP has said.

The oil and gas company said carbon emissions would fall more rapidly than it forecast a year ago thanks to renewed efforts by countries to pursue greater energy security by supporting domestic, renewable energy supplies.

In its annual energy outlook report, BP said it had reduced forecasts for global emissions in 2030 by 3.7% and by 9.3% in 2050. It expects oil demand to be 5% lower and gas demand to have fallen by 6% by 2035.

The company said deployment of renewables projects would be 5% higher at current rates.

Here’s the full story:

Growth in Belgium slowed to a near-standstill in the final quarter of last year.

Belgium’s gross domestic product (GDP) increased by 0.1% in the fourth quarter from the third quarter, official data shows, which is down on the 0.2% growth in Q3.

On an annual basis, growth slowed to 1.4%, from 1.9% year-on-year in Q3.

Poland’s economy slowed last year, as Russia’s invasion of Ukraine and a string of rapid interest-rate increases hit growth.

Polish gross domestic product rose by 4.9% during 2022, Statistics Poland reports, which is weaker than the 6.8% rise in GDP during 2021. It’s slightly above forecasts: mst economists surveyed by Bloomberg had predicted a slowdown to 4.8%.

Growth was driven by industrial production, while consumer spending slowed – another sign of the impact of inflation on household consumption.

Almost a quarter of UK adults have reported they were occasionally, hardly ever, or never, able to keep comfortably warm last month.

That’s according to new research into the impact of winter pressures from the Office for National Statistics, released this morning.

The problem was worse for respondents experiencing moderate-to-severe depressive symptoms (44% reported problems keeping warm) and people using prepayment, or “top-up”, meters for energy bills (where 41% struggled).

Earlier this month, Citizens Advice urged ministers to stop the forced installation of prepayment meters after 3.2 million people – the equivalent of one person every 10 seconds – were left with cold and dark homes last year as they ran out of credit.

Hundreds of thousands of customers were switched to prepayment meters, having run up debts with their energy suppliers.

The ONS report also shows the impact of NHS delays on UK workers. Around 1 in 5 (21%) adults reported they were waiting for a hospital appointment, test, or to start receiving medical treatment through the NHS.

Of that group of people waiting for NHS treatment, around 4 in 10 (39%) employed or self-employed adults said the wait had affected their work, including 26% saying they reduced their working hours and 7% went on long-term sick leave.

Almost a quarter (23%) of adults who needed to see a GP in the past month reported not being able to get an appointment, the ONS found.

Analysis released this morning shows that more than 1.6 million adults aged 50 and over are unable to work because of long-term sickness.

Ireland’s economy grew by a pacy 3.5% in the last quarter of 2022, new Central Statistics Office data shows.

It esimates that Gross Domestic Product (GDP) grew by an estimated 3.5% in Quarter 4 (Q4) 2022, when compared with Q3 2022, up from 2.3% growth in the third quarter.

This growth was driven mainly by expansion in the manufacturing sector, the agency says.

GDP for the full year 2022 is estimated to have increased by 12.2%, when compared with 2021.

However, Ireland’s GDP data can be distorted by the presence of many multinationals in the country, including major tech and pharmaceuticals firms.

While Gross Domestic Product measures the value of what is produced in Ireland, another measure - Gross National Product – measures how much of that value stays in the country.

ING: German winter recession remains base case

Recession fears are back after today’s data showed that Germany’s economy shrank by 0.2% quarter-on-quarter in October-December, says ING’s Carsten Brzeski.

A winter recession remains the base case for the German economy, he fears, due to energy supply worries, global trade disruption, the high investment needed for digitalisation and infrastructure, and an increasing lack of skilled workers.

Brzeski also warns that the economic outlook for Europe’s largest economy is “anything but rosy”, telling clients:

Not falling off the cliff is one thing, staging a strong rebound, however, is a different matter. And there are very few signs pointing to a healthy recovery of the German economy any time soon.

First of all, we shouldn’t forget that fiscal stimulus over the last three years stabilised but did not really boost the economy. Industrial production is still some 5% below what it was before Covid, and GDP only returned to its pre-pandemic level in the third quarter of 2022.

Industrial orders have also weakened since the start of 2022, consumer confidence, despite some recent improvements, is still close to historic lows, and the loss of purchasing power will continue in 2023.

Brzeski also warns that like every eurozone economy, the German economy still has to digest the full impact of the European Central Bank’s rate hikes – which could intensify on Thursday when the ECB sets borrowing costs.

He says:

Demand for mortgages has already started to drop and, as in previous hiking cycles, it didn’t take long before the demand for business loans also started to drop.

In short, the German economy will still be highly affected by last year’s crises throughout 2023.

JD Sports hit by 'cyber incident'

Back in the UK, JD Sports Fashion Plc has become the latest company to fall victim to a cyber attack.

JD Sports has told the City that a system which contained customer data relating to some online orders placed between November 2018 and October 2020 has been accessed, affecting its JD, Size?, Millets, Blacks, Scotts and MilletSport brands.

The information that may have been accessed consists of the name, billing address, delivery address, email address, phone number, order details and the final four digits of payment cards of approximately 10 million unique customers.

JD is now proactively contacting affected customers, to warn them to be vigilant to the risk of fraud and phishing attacks. This includes being on the look-out for any suspicious or unusual communications purporting to be from JD Sports or any of our group brands, it says.

JD Sports says it does not hold full payment card data and has no reason to believe that account passwords were accessed.

The company is working with “leading cyber security experts”, and in contact with relevant authorities, including the UK’s Information Commissioner’s Office (ICO).

Neil Greenhalgh, chief financial officer of JD Sports, said:

“We want to apologise to those customers who may have been affected by this incident.

We are advising them to be vigilant about potential scam e-mails, calls and texts and providing details on how to report these. We are continuing with a full review of our cyber security in partnership with external specialists following this incident. Protecting the data of our customers is an absolute priority for JD.”

Royal Mail was hit by a ransomware attack by a criminal group earlier this month, which left it unable to send parcels or letters abroad, while The Guardian experienced a ransomware attack in December.

The unexpected fall in German GDP in the last quarter means a recession - commonly defined as two successive quarters of contraction - has become more likely.

Many experts predict the economy will shrink in the first quarter of 2023 as well, Reuters points out.

The economy ministry has said, though, that the situation in Germany is expected to improve from spring onwards.

German GDP fell 0.2% in Q4 - halfway into recession

Just in: Germany is on the brink of recession, after its economy contracted in the last quarter of 2022.

German GDP fell by 0.2% in the October-December quarter, statistics body Destatis has reported. That’s worse than expected – economists had forecast that GDP would be flat in the quarter.

Germany’s economy was hit by soaring energy prices at the end of last year, driving up the cost of living. Inflation hit 11.6% in October, as Russia squeezed energy supplies to Europe.

Household spending fell during the quarter, pulling growth down, Destatis explains:

After the German economy held up well in the first three quarters despite difficult conditions, economic output decreased slightly in the fourth quarter of 2022.

In particular, the price-, seasonally and calendar-adjusted private consumer spending, which had supported the German economy in the course of the year to date, was lower than in the previous quarter.

A recession is commonly defined as two successive quarters of contraction, so Germany would be in recession if its GDP shrinks in the current quarter (January-March) as well.