Germany is already in recession, but we do not need one in the UK. Maybe Jeremy Hunt, our Chancellor, is comfortable with the idea, if that were the price for getting inflation under control, as he told Sky News on Friday.

I don’t like what is happening in the bond market, because higher bond yields squeeze demand. But we did manage to scramble through without a recession last year, as I thought we probably would, and now there is a fighting chance we will get though this year with a bit of growth.

Germany, by contrast, had just had two successive quarters where the economy has shrunk, the classic definition of recession.

If you believe the latest forecasts from the International Monetary Fund, the ones that reversed their dire predictions about Britain, the German economy will decline marginally over the year, whereas the UK will grow by 0.4 per cent.

That is not great, and the other G7 economies are expected to grow faster. But a plus is better than a minus.

Under pressure: Germany is already in recession, but we do not need one in the UK

Under pressure: Germany is already in recession, but we do not need one in the UK

Under pressure: Germany is already in recession, but we do not need one in the UK

What is up? Well, the first thing to say is that no one should wish for recession. A declining economy means falling incomes, fewer jobs, lower tax revenues and hence less money for public services. So if we can get inflation down without crashing the economy, that would be by far the best outcome.

I worry that the Bank of England, having made the mistake of raising interest rates too slowly, will now make the opposite mistake of pushing them too high.

But the really interesting thing here is the contrast with Germany. Both are successful economies, with Germany the world’s third largest exporter of goods after China and the US, and the UK the second largest exporter of services, also after the US. Both have low unemployment and attract immigrant workers. Germany does run a current account surplus, while the UK has a current account deficit. This is a contrast that perhaps explains the general perception that Germany is performing better overall.

The problem if you rely on merchandise exports to drive your economy, as does Germany, is what happens if global trade relations become more fractious.

This is not simply a matter of the current scrap in the silicon chip industry, where the US has banned China importing top-end chips. Take a basic product such as cars. China is by far the largest market for Volkswagen, selling 3.18 million cars there last year. But China is racing ahead in producing its own brands, notably in electric cars, and VW is starting to lose market share.

Of course, VW and the other manufacturers are making the transition. But China seems to have a competitive advantage in mass-market electric vehicles, which is particularly serious for Germany since cars are its biggest export.

If the world continues to move towards a more confrontational relationship between the US and China, Germany will be particularly exposed. The UK has different vulnerabilities. There has been some leakage of financial services to continental Europe and to Ireland following Brexit, as a result of political pressure from the EU.

Europe is trying to push back UK finance in rather the same way as China is seeking to push back the German car industry. Our universities may be becoming over-reliant on foreign students. China provides the largest group, with 150,000 young people studying here. But UK dominance of those two service industries – finance and education – is remarkable.

Finance and professional services are the main contributor to that number two slot in service exports, while UK universities have four of the top ten places in the world on the most recent QS ranking: Cambridge, Oxford, Imperial and UCL. The highest German one comes in at 49.

The point here is that the UK and Germany have different specialities. The question is which economies are likely to be under more pressure if international trade relations become really disruptive. And as we have seen last week, the UK seems to be more resilient than economists expected a few months ago, while Germany has proved more vulnerable.

Let’s hope the Treasury and the Bank of England don’t now mess things up.

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