During the UEFA EURO 2020 opening game, France arguably dominated its archrival Germanyy. While both teams have since exited the tournament, we find a welcome tie between the EU’s two largest economies when it comes to weathering the Covid-19 crisis, judging by GDP developments, labor market performance, debt toll and policy support. While this is only a halftime assessment as the Covid-19 crisis still far from resolved, and economic activity remains subdued, it suggests that the Eurozone policymaking won’t have to face a penalty for economic divergence.
Headline GDP performance: France 0 – 0 Germany. Judging by the latest headline GDP figures, the French and German economies show no meaningful divergence, with both registering roughly 5% below pre-crisis GDP levels in Q1 2021. However, Q1 acted as the great equalizer in this regard, with the French economy proving relatively resilient (-0.1% q/q) at the start of 2021, whereas German GDP contracted by close to -2% q/q. However, looking beneath the surface, we find some quite notable divergence
Figure 1 – Real GDP & components, Index: 100 = Q4 2019
Headline GDP performance: France 0 – 0 Germany. Judging by the latest headline GDP figures, the French and German economies show no meaningful divergence, with both registering roughly 5% below pre-crisis GDP levels in Q1 2021. However, Q1 acted as the great equalizer in this regard, with the French economy proving relatively resilient (-0.1% q/q) at the start of 2021, whereas German GDP contracted by close to -2% q/q. However, looking beneath the surface, we find some quite notable divergence
Figure 1 – Real GDP & components, Index: 100 = Q4 2019