A sharp and unexpected plunge in German exports gives a further signal that weak demand is dragging on Europe's largest economy. And, as David Pollard reports, the latest ECB minutes talk of the risk of a 'significant' impact on the euro zone from Britain's Brexit vote.
Europe's heavy lifter is feeling the strain. Data this week showed the biggest drop in Germany's industrial output in nearly two years. New data shows German exports plunging in May by 1.8 per cent - unexpectedly. Imports edged up by just 0.1 per cent - also short of market expectations. Much of its trade is with its euro zone neighbours. Though in this instance the worry is global growth - even if Europe's problems play a role there too. (SOUNDBITE) (English) SEVEN INVESTMENT MANAGEMENT, BEN KUMAR SAYING: "The main thing driving fears across Europe, and indeed, the lack of trade data, is the uncertainty surrounding the referendum. I don't think it's necessarily because Britain is such an important trade partner. I think it's because people around the world have basically been on pause, and when that happens trade does tend to slow." France is warning that the fallout from the UK referendum could shave up to 0.2 per cent off its growth. That's less than the 0.5 per cent Mario Draghi sees it taking off euro zone GDP as a whole. The minutes of the ECB's last meeting before the vote talking of the risk of "significant negative spillovers." More central bank action possibly on the cards then - if not necessarily yet. (SOUNDBITE) (English) SEVEN INVESTMENT MANAGEMENT, BEN KUMAR SAYING: "The ECB's bond-buying, corporate bond-buying, only started about a month ago. They announced it in March, but it takes three months to get going. So they haven't really even had a full month of this new kind of stimulus. So you don't need anything from the ECB. The Bank of England has room to cut rates - it could do further quantitative easing. And I don't think the Federal Reserve in the US is aiming for anything other than eventually, one day, raising rates again." The next ECB policy meeting is on July 21st - but in the meantime it faces another problem. That the rush for safe haven assets like government debt is putting a choke on the availability of bonds it can buy, in its 1.7 trillion QE programme.