Germany’s central bank has warned that Europe’s largest economy is likely to tip into recession in the third quarter, dragged down by a sharp drop in German exports and a decline in industrial production, the Financial Times reported. The Bundesbank said in its monthly update that it expected Germany’s economy to remain “lacklustre” in the three months to September, adding that it “could continue to decline slightly” after it shrank by 0.1 per cent in the three months to June.

The German economy shrank in the three months to June as trade tensions weighed on its export-heavy manufacturing sector and intensified the pressure on politicians in Berlin to loosen the fiscal purse strings, the Financial Times reported. Germany’s output fell 0.1 per cent in the second quarter from the previous three months, meaning annualised output growth slowed to 0.4 per cent in the year to June — its slowest for six years.

Expectations for the German economy have slumped to their lowest level since the eurozone debt crisis eight years ago amid deepening concerns over the US-China trade dispute and the potential for a chaotic UK exit from the EU, the Financial Times reported. The Zew survey of financial market experts revealed on Tuesday that economic sentiment in August had dropped to minus 44.1, its lowest since December 2011 and much gloomier than estimates from analysts in a Reuters poll who had predicted it to be minus 28.5. The index had come in at minus 24.5 in July.

The German economy is stuck in a rut. The country’s large, export-dependent manufacturing sector is reeling from the collapse in global trade while problems within domestic industry compound the overall economic malaise, the Financial Times reported. The services sector has held up, but the disconnect is not certain to last much longer — business cycle indicators already point to a mild recession. Benefits from further monetary easing will be constrained by unprofitable banks and vast savings. Fiscal space is abundant. It must finally be used.

Leoni has hired an external adviser to monitor its ongoing restructuring, two sources said on Thursday. Magazine WirtschaftsWoche reported that representatives of Leoni’s creditors had met on Monday to discuss the firm’s liquidity situation, Reuters reported. Leoni has hired Hans-Joachim Ziems as an external expert for the restructuring, the sources told Reuters, adding that Leoni managed to reassure its creditors. Leoni said it was in constructive talks with its creditors but declined to provide details, adding that its lenders supported its saving and strategy scheme.

Industrial production in Germany dropped by a larger-than-expected 1.5 per cent month on month in June, compounding fears that Europe’s largest economy could be heading for its first recession in more than six years, the Financial Times reported. Analysts polled by Reuters had estimated output would fall 0.4 per cent during the month compared with May. The fall meant that industrial production was 5.2 per cent lower than a year ago, Germany’s statistics office said. Carsten Brzeski, ING’s chief economist for Germany, characterised the figures as “devastating, with no silver lining”.

The pace of German expansion slowed more in July than earlier estimates had suggested while businesses’ optimism for future production fell to its lowest in more than four and a half years, a leading indicator’s final figures showed, escalating fears that the eurozone’s biggest economy faces recession in coming months, the Financial Times reported. IHS Markit’s final services reading recorded 54.5, well below a preliminary estimate of 55.4. This was also lower than June’s nine-month high of 55.8, IHS Markit data revealed on Monday. A figure above 50 still indicates growth.

A German group is interested in buying British Steel’s French factory, according to people aware of the situation, even as efforts drag on to prevent a break-up of the stricken company, the Financial Times reported. British Steel collapsed into insolvency more than two months ago after the government rejected its plea for a bailout, throwing into doubt the future of one of the country’s largest manufacturers.

German industrial automation provider Eisenmann SE has filed for insolvency and launched a strategic reorientation plan to help the company return to profitability in a plan that could see some business units sold off, corporate leaders said Monday, DC Velocity reported. Böblingen, Germany-based Eisenmann this week filed its petition for the opening of insolvency at Stuttgart District Court, also submitting applications for the related business units Eisenmann Anlagenbau GmbH & Co. KG, Eisenmann Lactec GmbH, and ENisco GmbH & Co. KG.

Downer EDI Ltd warned on Thursday that it expects a negative impact to its full year 2019 results following the insolvency of Germany’s Senvion SA, the company’s construction partner in the Murra Warra wind farm in Victoria, Reuters reported. Sydney-based Downer said wind turbine manufacturer Senvion’s bankruptcy would result in a charge of A$45 million ($30.83 million) for the full year, related to obligations for completing the wind farm.