German and Italian industrial orders posted unexpected falls in June suggesting global weakness was weighing on Europe's biggest economies at the end of the second quarter. Kirsty Basset reports
A drop in large orders and weak foreign demand for goods. Germany's economy is feeling the squeeze - with industrial orders falling for the second time in three months, down 0.4 per cent on the month. (SOUNDBITE) (English) JAMES BEVAN, CHIEF INVESTMENT OFFICER, CCLA, SAYING: "The German predicament is essentially a reflection of a weak global economy." Italy, too saw a drop in demand. Seasonally adjusted industrial output fell unexpectedly for the second month in a row, down 0.4 per cent in June after declining 0.6 per cent in May. And growth prospects are darkening ahead of a crucial referendum which has the potential to trigger the government's collapse. (SOUNDBITE) (English) JAMES BEVAN, CHIEF INVESTMENT OFFICER, CCLA, SAYING: "I think that the recorded numbers for the Italian economy are rather different to the underlying economic picture, because of course there is a broad expectation that a large chunk of Italy's economy is indeed not recorded through the official books. That said, I would say until we have Mr Renzi's vote in the October period out of the way, it is hard to see that sentiment and investment will accelerate." The European Central Bank says the global economic outlook has become more uncertain following Britain's decision to leave the EU. But with the euro zone economy largely shrugging off the Brexit vote so far, the ECB is predicting a modest recovery for the bloc. Nonetheless data for July will be anxiously anticipated - it's expected to show the consequences of the British referendum.