Europe at the brink of a new economic crisis, claim economists and analy

Brussels/Berlin: Both Germany and the United Kingdom, known to be the mainstays of the European economy are reeling under the shadows of recession. The German economy has fallen by 0.1% in the third quarter of 2019 and has recorded a decrease in demand for industrial production in the last two months. The investments in the British industrial sector has plunged by five billion Pounds, along with a decline in the employment sector. Given the developments, Stephen Schwarzman, co-founder of the renowned financial institution ‘Blackstone’, has warned that the European countries were facing the threat of ‘Lost Decade’, like Japan.

Since the last few months, the leading institutions such as the International Monetary Fund (IMF), OECD and the European Central Bank (ECB) have been consistently issuing warnings concerning the European economy. However, the analysts and economists have claimed that Germany did not pay much attention to the signs. The trade war raging between the United States and China, the uncertainty regarding Brexit, tensions in the Middle East and the aggressive US stance on trade are hitting the European economy.

However, Germany and its allies, which had adopted an assertive stand during the 2009 recession and the ensuing economic crisis crippling Europe, cannot be seen taking firm steps to resolve the current recession-like situation in Europe. The German economy has been forecast to be heading towards an economic slowdown from the start of the year. Analysts expressed regret over the German Chancellor Angela Merkel not taking any special measures to bail out the economy despite the prevalent condition.

Germany is known as the engine of the European economy, and therefore, stagnation in the German economy could push the entire European economy into a recession. Despite being aware of the situation, the European leadership’s dilly-dallying in taking decisions is surprising. Some analysts believe the situation has arisen, as the German administration doesn’t have the capacity to face the US-China trade war and the uncertainty surrounding Brexit, simultaneously.

The chief of Blackstone, the world’s leading private equity fund, has warned that the inefficiency of the European leadership may push the European economy towards a ‘Lost Decade’. The decade of 1991 to 2000 was known as the Lost Decade in the Japanese economy. The Japanese GDP, per capita and inflation recorded significant declines during the decade.

If the European countries did not massively increase the quantum of investments in the economy and provision of significant funds, the threat of the EU bracing for the Lost Decade looms largeSchwarzman warned. Also, he underscored that international financial institutions, such as the IMF and OECD had already drawn attention to the risks in the past.

Also, the HSBC, a leading bank in the United Kingdom and Europe, has decided to reduce the number of employees by a whopping 10,000, over the next few months.