Here’s my colleague Richard Partington on today’s EC growth figures:

The UK will sink to the bottom of the European economic growth league next year to join Italy as the slowest-growing economy in the EU, before falling further the year after to anchor the table alone, according to European commission forecasts.

The EU’s gloomy predictions are based on a soft Brexit – meaning Britain is expected to lag behind all its EU peers even if Theresa May can reach a deal with Brussels before 29 March.

The commission forecasts that consumer spending growth will remain weak, continuing a subpar performance since the EU referendum in June 2016. It said business investment would stay subdued, while external demand for UK goods will dwindle. The commission predicted the result would be GDP growth of 1.2% in 2019 and 2020.

That’s probably all for today....

Economists at HSBC have bad news for Germany: they believe its economy probably shrank over the summer.

The first estimate of German GDP in the third-quarter of 208 is released next Wednesday. HSBC believes it will show the economy contracted by 0.1%, down from a previous forecast of +0.4%.

In a new report, they say:

After thirteen consecutive quarters with positive quarterly growth rates, the German economy seems likely to have taken a breather in Q3 2018.

That’s partly due to the slump in exports in September, in the face of trade conflicts (as covered earlier this morning).

HSBC explain how this could mean net trade dragged on growth:

The headwinds from the slowdown in world trade might also have been weighing on German export activity, which could have affected GDP negatively on the expenditure side.

At the same time, import growth remains quite strong, resulting in the trade surplus hitting its lowest level since March 2014 in July.

New European car emission tests have also hurt vehicle production in recent months, a key area of the German economy.

Set your alarm clocks for 7am GMT next Wednesday, when the German growth figures are released.

The EC is keen to point out that its forecasts are based on the “purely technical assumption” that the EU and UK maintain their current trading relationship after Brexit.

In other words, Britain is expected to lag behind Europe in the event of a soft Brexit, rather than a hard Brexit that causes significant disrupion to trade.

On that basis, the EU predicts that:

• Consumer spending growth will be weak in 2019, as real wage growth will be modest.
  
• Business investment growth will rebound in 2019, but remain “relatively subdued following a prolonged period of heightened uncertainty.”
  
• Net trade’s contribution to growth will continue to dwindle, “alongside slowing external demand”.
  

That adds up to growth of just 1.2% in both 2019 and 2020.

But the EC also warns there are large, downside risks to these forecasts - if Brexit is less benign, growth will be slower, it fears.

In ANOTHER gloomy warning, credit rating agency Moody’s has predicted that global economic growth was likely to slow in the next two years.

Reuters has the details:

“We expect global growth to slow to under 3.0% in 2019 and 2020, from an estimated 3.3% in 2017-18”, the agency said in a new report.

Moody’s also fears that the US-China trade war will intensify in 2019, hurting the wider global economy.

It wasy:

“In both countries, the overall direct macro impact on growth will be manageable.

However, persistent and broadening tensions between the two largest economies globally are increasingly likely to have widespread negative implications by undermining investment.”

The UK is expected to be the third slowest-growing EU member this year (at +1.3%), behind Italy (+1.1%) and Denmark (1.2%).

Today’s EC forecasts show the UK sinking to joint last place with Italy in 2019, at +1.2%.

In 2020, the UK is expected to underperform every EU member with growth of 1.2%, while Italy creeps up to 1.3%.

These forecasts are inevitably speculative, as the Commission simply doesn’t know how Brexit will pan out. It also can’t be sure what policies Italy’s new populist government will follow. But it’s not a great outlook for either country....

The European Commission’s latest assessment of the UK economy isn’t terribly encouraging, as Britain prepares to leave the EU next year.

The EC expects growth to remain weak, and unemployment to rise:

UK GDP growth is currently subdued and expected to remain so over the forecast horizon. Private consumption growth is forecast to remain weak as real wages grow modestly and households look to maintain savings.

Heightened uncertainty means that business investment growth is likely to remain constrained. The net trade contribution to growth is projected to decrease in-line with a moderation in external demand.

Employment growth is expected to slow significantly, leading to a modest rise in unemployment. Inflation should ease as the impact of sterling’s 2016 depreciation unwinds.

The EC predicts that Britain’s economy faces a tough few years.

UK growth is forecast at just 1.3% this year, and 1.2% in 2019 and 2020.

That’s the joint lowest for any (current) EU country next year, alongside Italy.

Germany, in contrast, is expected to grow by 1.7% this year, 1.8% in 2018 and 1.7% in 2020.

The UK growth forecasts are based on the assumption that Britain and the EU maintain the current “status quo” in their trading relationship after Brexit.

That’s not guaranteed, given the slow progress in agreeing a withdrawal agreement...

Newsflash: Europe’s economy will slow steadily over the next few years as trade wars, geopolitical tensions and higher oil price all bite.

That’s according to the latest projections from the European Commission, just released.

They show that growth in the euro area is forecast to ease from a 10-year high of 2.4% in 2017 to 2.1% in 2018.

It is then seen dropping to 1.9% in 2019, and 1.7% in 2020.

The wider European Union is expected to growth by 2.2% this year, slowing to 2.0% in 2019 and 1.9% in 2020.

The Commission blames three factors, saying

Rising global uncertainty, international trade tensions and higher oil prices will have a dampening effect on growth in Europe.

More to follow!

German factory chiefs will be hoping for a breakthrough in the US-China trade dispute soon, before the slump in exports deepens.

And overnight, a top Chinese diplomat has suggest that presidents Trump and Xi could make progress at the G20 world leaders’ meeting in Argentina in three weeks time.

Politburo member Yang Jiechi told U.S. national security adviser John Bolton that:

“China is committed to working with the U.S. to achieve a no-confrontational, conflictless, mutually respectful co-operation in which both sides win.

“Both sides should seek an appropriate solution through equal and mutually beneficial negotiations.”

Yang’s comments were released by China’s Foreign Ministry, suggesting Beijing is keen to get its message out.

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

Germany has suffered a drop in exports as the trade tensions swirling around the globe hit Europe’s largest economy.

German exports shrank by 0.8% in September, statistics body Destatis reported this morning, dashing expectations of a 0.3% rise. Imports declined by 0.4% (against expectations of a 0.8% rise).

This shrank Germany’s trade surplus to around €17.6bn, from €18.2bn in August, on a seasonally adjusted basis.

Alarmingly, exports were actually lower than in September 2017, even though the world economy has expanded over the last year.

Here’s the details, from Destatis:

Exports, September 2018

• €109.1bn
  
• -0.8% on the previous month (calendar and seasonally adjusted)
  
• -1.2% on the same month a year earlier
  

Imports, September 2018

• €90.7bn
  
• -0.4% on the previous month (calendar and seasonally adjusted)
  
• +5.3% on the same month a year earlier
  

It’s the latest sign that Germany’s economy has slowed sharply this year. Third-quarter GDP figures due next Wednesday may confirm that growth stalled over the summer.

German exporting powerhouse seems to be suffering badly from America’s protectionist stance on trade. The tariffs imposed on EU steel, and a swathe of Chinese products entering the US, are creating new frictions and dampening demand.

Also coming up today

Asian stock markets have rallied, as investors continue to welcome the US election results.

Last night, the Dow jumped by 545 points (or 2.1%), the best day post-midterm rally since 1982, as Wall Street anticipated gridlock in Congress now the Democrats have control of the house.

European markets are likely to gain ground at the open too, with the FTSE 100 called up 20 points:

The European Commission issues its latest forecasts for the European economy this morning, and may confirm that growth is slowing.

Investors will also be waiting to hear from the US Federal Reserve, when it sets monetary policy tonight. The Fed isn’t expected to raise rates until December, but its views on the US economy may move the markets

The agenda

• 10am GMT: European Commission
• 1.30pm GMT: US weekly jobless figures
  
• 7pm GMT: Federal Reserve interest rate decision