Mercedes-Benz halted all further investment in Germany on Thursday. A day later, fresh figures showed the problem runs deeper than one carmaker. Europe’s industrial heart is cooling, hiring has stopped, and the US is now growing twice as fast.

The headline figure looks calm. The eurozone grew by 0.4 per cent between July and September, according to a flash estimate from Eurostat, the EU’s statistics office. That is a little slower than in the spring, but hardly a crisis.

The trouble lies underneath. After a year of small gains, the number of people in work did not grow at all. Meanwhile, the US economy expanded twice as fast as the eurozone’s.

France and Germany in low gear

France has become Europe’s problem child. Its economy has not grown in a single quarter this year and is now smaller than a year ago, the only one in the EU. Exports and investment are falling.

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French households are still spending. But inflation has climbed to its highest level since early 2024, and rising prices eat into their budgets just as Paris tries to rein in one of Europe’s largest deficits. Every month without growth makes that task harder.

Germany is barely moving, and Italy has stalled. The gloom in German industry deepened on Thursday, when Mercedes-Benz told staff it would halt all further investment in its German plants. Talks with its works council and unions on cutting labour costs have stalled, and factory closures are now on the table.

The carmaker wants staff to work 40 hours a week for the same pay. About a fifth of German workers, mostly in cars, engineering, and steel, have a 35-hour week under union contracts. Production chief Michael Schiebe says an hour of factory work in Germany can cost up to five times more than in Eastern Europe. EU governments and lawmakers agreed this week to give heavy industry extra free carbon allowances, but that does nothing about wages.

Spain and Poland in the fast lane

The growth is happening elsewhere. Spain grew faster than the eurozone average, and its economy is almost three per cent bigger than a year ago. Poland, outside the eurozone, is doing better still.

The map of Europe’s economy is shifting. Its old industrial heart is losing steam, while the south and east keep running. For the eurozone as a whole, though, that is not enough to keep pace with America.

If we fail to achieve the turnaround outlined in the budget, we are headed straight for a wall. — Roland Lescure, French Minister of Finance

For Paris, the stakes are highest. The government still hopes for growth this year, although none has arrived so far. Finance Minister Roland Lescure has tied everything to next year’s budget. “If we fail to achieve the turnaround outlined in the budget, we are headed straight for a wall,” he told France Info radio.