The Daily Update: German Growth Downgrade / Pret Index

Germany has revised its forecast for economic growth significantly lower this year as the ongoing effects of the pandemic, higher energy costs and supply chain disruptions continue to drag on Europe’s largest economy. The cut, to 2.6% this year, compared with a projected 3.5% growth in April, reflects a ‘scarcity in some raw materials and rising energy prices, particularly for gas’ Peter Altmaier, the Economy Minister said in an interview this morning. However, it was not all bad news, as the government now expects GDP growth for 2022 to rise to 4%, from an earlier forecast of 3.6%. For 2023, the expectation is for growth to normalise to an expansion rate of 1.6%.

The widespread supply chain disruptions, coupled with unusually high demand, are also leading to price increases, with some in government expecting consumer price inflation to rise to 2.9 per cent this year. However, the government still believes that the price surge will be temporary and sees inflation easing to 2.2% in 2022 and to 1.7% in 2023 according to those in the know. In 2020 the figure was just 0.6%.

We also had the latest Pret Index figures out yesterday. It looks as though Hong Kong, Paris and the Big Apple continue to see more workers returning to their offices. It also showed there was more business going through London’s airports, up 7% to 83%. However, the outliers were the London Suburbs, down 2% (although they are still 131% above pre-Covid levels) and the West End. The City of London was unchanged at 84%.