Germany says Europe’s largest economy is in ‘troubled waters’ and cuts its growth forecast [Video]

FRANKFURT – The German government said Europe’s largest economy was in “troubled waters” and slashed its growth forecast for this year as it struggles with a lack of skilled labor, excessive bureaucracy, high interest rates and lagging investment in new projects — while a relatively modest set of tax breaks for business remains blocked in the legislature.

The growth forecast was lowered to 0.2% from the previous forecast from last fall of 1.3%. That would follow a shrinking of the economy by 0.3% for all of last year.

The loss of Russian gas in Germany led to a spike in energy costs that hammered energy intensive industries and contributed to high consumer inflation that eroded purchasing power and made consumers more reluctant to spend. Those two headwinds have eased as inflation and oil and gas prices have fallen, and as wages have started to rise to make up for inflation and …