Ambrose: The eurozone has stagflation

Germany never ceases to disappoint, held back by ordoliberal ideology and by a dysfunctional coalition that can agree on nothing.

Germany has shed more than half a million jobs since early 2022 and the unemployment rate has ratcheted up to 6pc. 

It is tightening fiscal policy by 1pc of GDP this year to comply with the country’s debt-brake and an austerity ruling by the constitutional court. 

It has slashed public investment to the bone even though Germany’s infrastructure is famously disintegrating.  

The euro bloc is in scarcely better cyclical shape  cost inflation picked up at the same time. This nasty mix has a whiff of 1970s stagflation

New export orders fell for the 29th successive month, exposing euroland’s second Achilles’ heel: the region is paying the price for a chronic dependency on foreign demand to keep growth alive. 

That is a risky formula in a world where China is playing the same game on a galactic scale, flooding markets with exports at cut-throat prices up and down the technology ladder.

it is nigh on impossible to sack the EU’s executive government, even when it persists in error. The Commission sits on top of everything as a permanent secular papacy.

The EU’s Stability Pact is biting again and fiscal tightening is on the way. The lagged effects of past rate rises by the ECB are still feeding through. 

Loan demand is dead, the M1 money supply is still contracting.

Ambrose Evans-Pritchard Telegraph 26 July 2024

https://www.telegraph.co.uk/business/2024/07/26/british-economy-good-health-eurozone-stagflation/

 Ordoliberalism

https://sv.wikipedia.org/wiki/Ordoliberalism