European politicians intensified demands for action to curb the euro's rise yesterday as data showed a sharp slowdown in Germany's third-quarter economic growth to almost zero.
German gross domestic product grew by just 0.1 per cent in the third quarter, according to the federal statistics office, which blamed the steeper-than-expected deceleration on Germany's fading export boom. Economists revised down forecasts for euro-zone GDP, due to be released today and also expected to show a marked slowdown.
Adding to the pressure on the European central bank to intervene, Mr Silvio Berlusconi, Italy's prime minister, warned in Rome that euro-zone growth "won't get any better unless there is a supra-national intervention that alters the euro's value".
Mr Wolfgang Clement, Germany's economics minister, expressed concern about the euro's rise and said he expected the ECB "to do its part to calm the situation". Aides to Mr Clement said he recognised it was not his place to call for intervention.
But Mr Ludwig Stiegler, a senior parliamentarian in the ruling Social Democrats, said the "ECB should now massively, and in a co-ordinated fashion, sell euros for dollars."
The latest remarks followed Wednesday's claim by Mr Domenico Siniscalco, Italy's economic minister, that "a co-ordinated intervention is being talked about again".
But he later said he meant simply that unilateral action would not make sense. The euro touched a record of $1.30 on Wednesday before falling back slightly. It closed yesterday at $1.2892.
On Monday Mr Jean-Claude Trichet, ECB president, described recent currency moves as "brutal".
But economists were sceptical about financial intervention by the ECB. Mr Simon Hayley, international economist at Capital Economics, argued that the US was likely to oppose intervention aimed at preventing a weakening of the dollar and there was "little evidence" that the euro was substantially overvalued.
"However enthusiastic politicians are, they won't convince the ECB," he said. The ECB again refused to comment yesterday.
Germany's economic recovery has been driven by exports. But Mr Joachim Fels, economist at Morgan Stanley, said that the effects of the euro's appreciation at the end of last year were now being felt.
