In a recent market analysis, Bruno Cavalier, Chief Economist at Oddo BHF, highlights the stagnation in the European economy, particularly emphasising the dim growth outlook for 2024 in Germany and France. He terms these nations as the “sick couple” of Europe, reflecting their weakened economic and political partnership.

Historically, various European countries have faced economic challenges, earning the moniker “sick man of Europe.” In recent times, Europe as a whole could be considered under this label due to lacklustre economic performance and social discontent, Cavalier opines.

“By the end of the Great Lockdown in mid-2020, a strong recovery had taken over, giving good hope of a lasting upturn. Unfortunately, the war in Ukraine and the energy crisis, followed by the sharp monetary policy tightening, put an end to this momentum. Worse still, these events revealed deep-seated weaknesses, so much so that the end of these shocks (end of rate hikes, fall in energy prices) does not guarantee the economy will suddenly take off again”, says Cavalier.

The eurozone’s GDP has been stagnant for six quarters, contrasting with growth in the United States and dynamic southern European countries. Both Germany and France face specific challenges; Germany’s industrial model is under pressure from global competition and energy issues, while France struggles with the burden of inefficient public spending.

Despite these challenges, according to Oddo, there’s hope that decreasing inflation, normalised energy prices, and potential ECB policy easing could provide some respite to Europe’s central economies.

Read the full insight here.