Europe

Two decades ago, Germany revived its moribund economy and became a manufacturing powerhouse of an era of globalization. Times changed. Germany didn’t keep up. Now Europe’s biggest economy has to reinvent itself again. But its fractured political class is struggling to find answers to a dizzying conjunction of long-term headaches and short-term crises, leading to a growing sense of malaise, the Wall Street Journal reported. Germany will be the world’s only major economy to contract in 2023, with even sanctioned Russia experiencing growth, according to the International Monetary Fund.

Nearly a third of councils in poor areas in the United Kingdom are considering bankruptcy as they run out of money, the Mirror reported. A survey of 47 local authorities found five are currently in the process of deciding whether to declare they cannot balance their books this year. The councils are thinking about issuing what is known as a Section 114 notice, which would freeze all non-essential spending. A further nine local authorities said they might have to declare bankruptcy next year.

Germany's rail workers will not go on open-ended strikes after less than 50% of union members voted in favor, German news agency dpa reported Monday. A vote of 75% in favor would have been necessary for all-out strike action, the Associated Press reported. A majority of workers also voted in favor of a recommendation that emerged from arbitration between EVG and the rail operator, Deutsche Bahn. The compromise deal includes a pay increase of 410 euros ($443) per month in two stages over a period of 25 months.

Switzerland's Competition Commission is looking into UBS's takeover of Credit Suisse, the authority said on Monday, Reuters reported. In March, the Swiss government, central bank and financial regulator rushed through a rescue deal for Credit Suisse, resulting in the country's two largest banks merging. "We confirm that the Swiss Competition Commission is looking at the takeover of CS by UBS and will send FINMA her results probably by the end of September," the Commission's vice-director told Reuters.

Germany's economy stagnated in the second quarter from the previous three months, showing no sign of recovery from a winter recession and cementing its position as one of the world's weakest major economies, Reuters reported. The figure of zero growth for the second quarter was in line with a first estimate published in late July. Year on year, adjusted GDP contracted by 0.2% in the second quarter. Quarter on quarter, economic activity had fallen by 0.4% in the fourth quarter of 2022 and by 0.1% in the first quarter of 2023.

Britain dodged a recession last year despite a historic energy price shock and an investor revolt that forced out the prime minister. Recent data have raised questions about whether it will be so lucky this time around, Bloomberg News reported. Surveys of purchasing managers and retailers both point toward a sudden slowdown in recent weeks. More companies are taking steps to address financial distress. Even the jobs market, which remained strong through the pandemic, is showing signs of weakening.

Sweden’s housing starts extended a plunge into the second quarter as lower home prices and rising construction costs put the brakes on building activity, Bloomberg News reported. Construction started on about 14,550 new homes in the first half of the year, which represents a 57% decline from the year-ago period, Statistics Sweden said on Thursday. Housing starts have been on a downward trajectory since last year, hit by one of the world’s biggest declines in residential property prices that’s in recent months leveled off.

Switzerland's financial regulator looked into the risk of money laundering at 30 banks this spring, FINMA said in an analysis published on Thursday, after identifying shortcomings in the area, Reuters reported. "In particular, an adequate definition of the money laundering risk tolerance, which forms the limiting framework of a robust risk analysis through set limits, was lacking in some cases," FINMA said. Read more.

German business activity contracted at the fastest pace for more than three years in August, a preliminary survey showed on Wednesday, Reuters reported. The HCOB German Flash Composite Purchasing Managers' Index (PMI), compiled by S&P Global, fell to 44.7 from July's 48.5, hitting its lowest since May 2020 and confounding analysts' expectations for a reading of 48.3. The indicator was below the 50 level denoting growth in activity for the second consecutive month.

The Czech government will scale back a planned loan from the European Union's post-COVID recovery fund to 19.4 billion crowns (805.75 million euros), from the initially planned 137 billion crowns, Industry Minister Jozef Sikela said on Wednesday, Reuters reported. The reductions were made after consultations with the European Commission, which concluded some of the funding Czechia needs could come from other channels, Sikela said.