Germany’s recession is now official after a 0.5 per cent fall in third quarter gross domestic product. This was worse than expected. The real shock was how badly exports have been hit as demand slumps worldwide. Export growth, which was powering ahead strongly, could come to a complete halt next year.

Thursday’s data offered up one bit of positive news – a small increase in consumer spending. But this looks unsustainable. True, German consumers have more to fall back on compared with their more profligate counterparts in the UK and the US: the savings rate in Germany has actually been increasing. Furthermore, the labour market has continued to improve, which has helped to strengthen disposable incomes. But that will not last. The employment outlook is bleak. Bank of America forecasts a 500,000 increase in the number of unemployed next year. Consumers fearful of job loss are unlikely to open their wallets, even if they have no pressing need to rebuild tattered finances.