ExpertEye European Automotive Report Q1 2017 | Page 18

Germany – Strongest European economy
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Germany remains the strongest economy in the EU and many would argue
the strongest in the world. The economy grew by 0.6% in Q1 over Q4 2016
with investment in equipment and building construction growing strongly
and household and government spending rising. In fact, Germany managed
to outpace the US, the UK and France. Whilst there is no doubt that the
traditional save more than you spend mentality of Germans has helped it
build a strong and prosperous economy it has also been helped by having a
currency and interest rates which are held down by other weaker economies
in the eurozone.
However, not everyone is happy about Germany having both a current
account surplus and budget surplus that many countries would envy. The
European Commission said in February that it was too big and that cutting
the surplus “would help the whole of the eurozone”
Unemployment remains low despite the influx of immigrants and the
increase in energy prices is helping to return Germany to a more stable
inflationary market, although this will put a slight brake on private
consumption. By contrast investment in equipment and machinery is set to
rise over the coming year or two as companies seek to create additional
headroom as capacity utilisation is rising.
European Automotive Report - 2017 Quarter 1
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