Germany’s GDP grew faster than previously thought in the second quarter, defying fears that higher energy costs driven by the Iran war would torpedo Europe’s biggest economy. German firms may have benefitted from the fact that Asian rivals were hit even harder by the choking off of trade via the Strait of Hormuz, reducing competition, but the figures nevertheless bolster a growing case among economists that markets have been unnecessarily downbeat on Europe’s prospects.
Huge challenges remain, however, with European companies facing intensifying competition from China. German automakers are under particular pressure: Volkswagen’s chief executive is due to present cost-savings measures to workers today, and unions warn that up to 140,000 jobs may be affected.