Germany's economic growth slows sharply in 2012

The German economy grew by 0.7% in 2012, a sharp slowdown on the previous year, preliminary figures show.

The figure was well below the 3% growth seen in 2011 and suggests the economy contracted in the fourth quarter.

"In 2012, the German economy proved to be resistant in a difficult economic environment and withstood the European recession," the federal statistics office Destatis said.

Some analysts believe the German economy will enter recession itself.

Destatis said economic activity "slowed down considerably" in the second half of the year, and particularly in the final quarter.

"The full-year growth figure [of 0.7%] implies a contraction of around half a percentage point in the fourth quarter," the office's top statistician Norbert Raeth said.

Last month, Germany's central bank, the Bundesbank, cut its growth forecast for this year to 0.4% and warned that the economy may have contracted in the final three months of 2012, and may do so again in first quarter of 2013.

The eurozone economy as a whole is already in recession, having contracted in both in the third and fourth quarters of last year.

Spending boost

For 2012 as a whole, Destatis said foreign trade was "very robust", with exports up 4.1% on 2011. Imports grew by 2.3%. The positive trade balance was "once again the main driving force for economic growth in Germany".

Household expenditure increased by 0.8%, while government spending was up 1%.

The figures also showed that while the service sector of the economy expanded, industry and construction contracted.

Destatis will publish official fourth-quarter growth figures on 14 February.

Strong case' for EU referendum, says Hague

There is a "strong case" for the British public to decide on the UK's future relationship with Europe in a referendum, William Hague has said.

The foreign secretary said he wanted the UK's EU membership to be a success but "fresh consent" would likely be needed as the institution changed.

David Cameron postponed a major speech on the future of Britain in Europe because of the Algerian hostage crisis.

Mr Hague said the speech would take place at some point this week.

Details of where and when the prime minister would be speaking would be announced on Monday, he added.

In the eagerly anticipated address, Mr Cameron is expected to argue that the UK wants to remain in the EU but on different terms and that a referendum could be held after the next election to give the public their say on the outcome of a future renegotiation.

'Better relationship'

However, this is likely to depend on the Conservatives winning the next election and other EU nations being willing to agree to changes - including the return of certain powers held in Brussels to Westminster.

Extracts of the speech - released to the media before Friday's planned event in the Netherlands was postponed - suggested Mr Cameron would have warned that the UK could "drift towards" exiting the EU if problems were not addressed.

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David Cameron risks being trapped by his own rhetoric and his backbenchers”

Douglas Alexander Shadow foreign Secretary

Mr Hague told the BBC that policy would be guided by the national interest and while the UK wanted an "outward looking" EU to prosper, the institution had changed a lot since the 1975 referendum which approved the UK's entry.

"We want to get a better relationship with the EU - there are changes we want in that relationship," he told the Andrew Marr show.

"We also need to see how changes in the eurozone are affecting the EU and how that affects this country and the relationship of the countries together.

"But when we have done that there is a strong case for fresh consent in this country and the people of this country having their say."

He said people would need to read the speech as a whole to understand "the context" in which any future referendum might be held.

He added: "It is about... making a success of membership of the EU but also with democratic consent for that in its modern form and the best form that we can bring about."

'Ideal solution'

The Lib Dems and Labour have warned any promise of a referendum in the years to come will cause years of uncertainty, deter foreign investment and increase the possibility of the UK eventually leaving the EU.

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What is really happening is that we will get the speech and then the Conservatives will launch a five-year campaign to try and keep us in the EU”

Nigel Farage UKIP leader

Shadow foreign secretary Douglas Alexander said Labour did not not support the status quo in Europe and changes were needed.

While the return of powers should be considered on a "case by case basis", he told the BBC's Sunday Politics, it was "disingenuous" to pretend - as he suggested many Conservatives were doing - that a wholesale renegotiation was inevitable or even likely.

"David Cameron risks being trapped by his own rhetoric and his backbenchers."

'Cosmetic'

Former defence secretary Conservative Liam Fox, who is one of the Tory MPs who has been briefed on the speech, said he believed the "ideal solution" would be for the UK to remain within the EU but on a fundamentally different basis, focused on trade.

If this could not be achieved, he told the same programme, the British public would have to consider whether they wanted to remain in the EU, adding that while withdrawal would cause "some difficulties" he believed they could be overcome.

And Nigel Farage, the leader of the UK Independence Party, which wants to withdraw from the EU, said he feared that any changes Mr Cameron could obtain from Brussels would be "cosmetic" and the UK risked becoming "a province of a United States of Europe".

"What is really happening is that we will get the speech and then the Conservatives will launch a five-year campaign to try and keep us in the EU," he told the Marr show.

"It is all reminiscent of 1975 when Harold Wilson came back with a cosmetic renegotiation and put it to the country."

Meanwhile the US Ambassador to the UK, Louis Susman, has become the latest senior US figure to warn against the UK leaving the EU.

"We cannot imagine a strong EU without a vibrant partner in the UK," he told Sky News's Murnaghan programme. "That is what we hope will come about but it is up to the British people to decide what they want."

Date: 2016-01-14; view: 753