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Forget this week’s minor decrease in the UK inflation number. 

The most important European data release was the confirmation from Germany that, during 2024, its economy contracted for the second consecutive year.

Europe’s largest economy shrank by 0.2% during 2024 – on top of a 0.3% contraction in 2023.

Now it must be stressed that this was a very early estimate from Germany’s Federal Statistics Office and that the numbers may be revised higher in due course. That health warning is especially appropriate this time around because, very unexpectedly, the figures suggest the economy contracted during the final three months of the year and most economists had expected a modest expansion.

Money latest: Guinness rival’s sales surge 632%

If unrevised, though, it would confirm that Germany is suffering its worst bout of economic stagnation since the Second World War.

The timing is lousy for Olaf Scholz, Germany’s chancellor, who faces the electorate just six weeks from now.

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Worse still, things seem unlikely to get better this year, regardless of who wins the election.

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How young people intend to vote in Germany

Germany, along with the rest of the world, is watching anxiously to see what tariffs Donald Trump will slap on imports when he returns to the White House next week.

Germany, whose trade surplus with the United States is estimated by the Reuters news agency to have hit a record €65bbn (£54.7bn) during the first 11 months of 2024, is likely to be a prime target for such tariffs.

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Fallout of Trump’s tariff plans?

Aside from that, Germany remains beset by some of the problems with which it has been grappling for some time.

Because of its large manufacturing sector, Germany has been hit disproportionately by the surge in energy prices since Russia invaded Ukraine nearly three years ago, while those manufacturers are also suffering from intense competition from China. The big three carmakers – Volkswagen, Mercedes-Benz and BMW – were already staring at a huge increase in costs because of having to switch to producing electric vehicles instead of cars powered by traditional internal combustion engines. That task has got harder as Chinese EV makers, such as BYD, undercut them on price.

Other German manufacturers – many of which have not fully recovered from the COVID lockdowns five years ago – have also been beset by higher costs as shown by the fact that, remarkably, German industrial production in November last year was fully 15% lower than the record high achieved in 2017.

German consumer spending, meanwhile, remains becalmed. Consumers have kept their purse strings closed amid the economic uncertainty while a fall in house prices has further depressed sentiment. While home ownership is lower in Germany than many other OECD countries, those Germans who do own their own homes have a bigger proportion of their household wealth tied up in bricks and mortar than most of their OECD counterparts, including the property-crazy British.

Consumer sentiment has also been hit by waves of lay-offs. German companies in the Fortune 500, including big names such as Siemens, Bosch, Thyssenkrupp and Deutsche Bahn, are reckoned to have laid off more than 60,000 staff during the first 10 months of 2024. Bosch, one of the country’s most admired manufacturing companies, announced in November alone plans to let go of some 7,000 workers.

More of the same is expected in 2025.

Volkswagen shocked the German public in September last year when it said it was considering its first German factory closure in its 87-year history. Analysts suggest as many as 15,000 jobs could go at the company.

Accordingly, hopes for much of a recovery are severely depressed.

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Starmer in Germany to boost relations

As Jens-Oliver Niklasch, of LBBW Bank, put it today: “Everything suggests that 2025 will be the third consecutive year of recession.”

That is not the view of the Bundesbank, Germany’s central bank, whose official forecast – set last month – is that the economy will expand by 0.2% this year. But that was down from its previous forecast of 1.1% – and growth of 0.2%, for a weary German electorate, will not feel that different from a contraction of 0.2%.

And all is not yet lost. The European Central Bank is widely expected to cut interest rates more aggressively this year than any of its peers. Meanwhile, one option for whoever wins the German election would be to remove the ‘debt brake’ imposed in 2009 in response to the global financial crisis, which restricts the government from running a structural budget deficit of more than 0.35% of German GDP each year.

The incoming chancellor, expected to be Friedrich Merz of the centre-right CDU/CSU, could easily justify such a move by ramping up defence spending in response to Mr Trump’s demands for NATO members to do so. Mr Merz has also indicated that policies aimed at supporting decarbonisation will take less of a priority than defending Germany’s beleaguered manufacturers.

But these are all, for now, only things that may happen rather than things that will happen.

And the current economic doldrums, in the meantime, will only push German voters to the extreme left-wing Alliance Sahra Wagenknecht or the extreme right-wing Alternative fur Deutschland.

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Who’s given Ukraine most aid – and does it have enough rare earth metals to ‘pay back’ US?

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Who's given Ukraine most aid - and does it have enough rare earth metals to 'pay back' US?

How much have America, Britain and the rest paid Ukraine in aid since the Russian invasion? And do they have any hope of getting money back in return?

These are big questions, and they’re likely to dominate much of the discussion in the coming months as Donald Trump pressurises his Ukrainian counterparts for a deal on ending the war. So let’s go through some of the answers.

First off, the question of who has given the most money to Ukraine rather depends on what you’re counting.

War latest: Ukraine agrees minerals deal with US – source

If you’re looking solely at the amount of military support extended since 2022, the US has provided €64bn, compared with €62bn from European nations (including the UK).

But now include other types of support, such as humanitarian and financial assistance, and European support exceeds American (€132bn in total, compared with €114bn from the US).

Divide Europe into its constituent nations, on the other hand, and none of them individually comes anywhere close to the US quantity of aid.

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That being said, simple cash numbers aren’t an especially good measure of a country’s ability to pay.

Look at US support as a percentage of gross domestic product and it comes to 0.5% of GDP. That’s almost precisely the same as the aid from the UK.

Looked at through this prism, it’s other countries which are clearly the most generous: Denmark, Estonia and much of the Baltics providing around 2% of their GDP – a far bigger amount versus their ability to finance it.

Still, compare the aid this time around with previous amounts spent in other conflicts and they are nowhere close.

Lend-Lease during WWII, aid during the Vietnam and Korean Wars, and even the first Gulf War, involved significantly bigger outlays than currently being spent on Ukraine.

That goes not just for the US but also for the UK, Germany and Japan, all of which provided more aid to the Kuwaitis and other affected nations during the first Gulf War.

Even so, it’s clear that the US and others have put significant resources towards Ukraine.

President Trump has been talking recently about recouping $500bn from Ukraine in the form of revenues from mining rare earth metals.

This is, on the face of it, slightly odd. Rare earth metals represent an obscure corner of the periodic table and play a small if important role in electronics and military manufacturing.

The entire market is small – making it essentially implausible that, even if Ukraine suddenly produced the majority of the world’s supply, the president could expect that amount of revenue back in return.

More to the point, while there are a couple of rare earth deposits in Ukraine, they have languished, unexploited, for years. They are so expensive to mine no-one has worked out how to extract the elements and make a profit at the same time.

And even if you presumed they could do, Ukraine would still be a relative minnow in global rare earths production.

Map of Ukraine minerals

Read more:
What minerals does Ukraine have?

Assuming, as one probably should, that Donald Trump didn’t just mean rare earths, but was talking more broadly about “critical minerals” (the two are different things, but let’s not get too pedantic here), there are also one or two other promising mine sites in the country.

There is an old, shuttered alumina plant seized from Russian oligarch Oleg Deripaska. There is a large lithium resource which could, if all went well, be the single biggest lithium mine in Europe.

Yet even taking this into account, Ukraine would still be a relatively small player in global lithium. Not nothing – but not world changing either. Certainly not enough to generate the hundreds of billions of dollars Mr Trump is seeking.

Then again, Ukraine has other resources at its disposal too: vast seams of coal in the Donbas, large iron ore reserves in the south of the country.

Both of these are in or close to Russian occupied areas – which might, from the Ukrainians’ perspective, actually be the point. Old fashioned as this stuff is, it does actually generate significant revenue. It might be Donald Trump’s best hope for some payback.

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Post Office scandal: 21 ‘Capture’ cases now being investigated for miscarriages of justice

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Post Office scandal: 21 ‘Capture’ cases now being investigated for miscarriages of justice

The number of convictions linked to a second Post Office IT scandal being investigated for miscarriages of justice – has more than doubled, Sky News has learned.

Twenty-one Capture cases have now been submitted to the Criminal Cases Review Commission (CCRC) for review.

Before Christmas, it was around eight.

They relate to the Capture computing software, which was used in Post Office branches in the 1990s before the infamous faulty Horizon system was introduced.

Hundreds of sub-postmasters were wrongly accused of stealing after Horizon software caused false shortfalls in branch accounts between 1999 and 2015.

A report last year found that there was a reasonable likelihood that the Capture accounting system, used from the early 1990s until 1999, was also responsible for shortfalls.

If the CCRC finds significant new evidence or legal arguments not previously heard before, cases can be referred back to the Court of Appeal.

More on Post Office Scandal

Lawyer for victims, Neil Hudgell from Hudgell Solicitors, says the next steps for the Capture cases and the CCRC are still “some months away”.

He said he is also hopeful that the first cases could be referred to the Court of Appeal before the end of this year.

Screengrabs from Adele Robinson i/v with lawyer for victims of the Capture IT system, Neil Hudgell from Hudgell Solicitors
Source P 175500FR POST OFFICE CAPTURE CASES ROBINSON 0600 VT V2 JJ1
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Lawyer Neil Hudgell described victims of the Capture IT system as ‘hideously damaged people’


“Certainly we will certainly be lobbying,” he said. “The CCRC will be lobbying, the advisory board will be lobbying any interested parties, that these are hideously damaged people of advancing years who need some peace of mind and the quicker that can happen the better.”

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In December the government said it would offer ‘redress’ to Post Office Capture software victims

‘We didn’t talk about it’

Among those submitted to the CCRC – Pat Owen’s Capture case was the first.

Her family have kept her 1998 conviction for stealing from her post office branch a secret for 26 years.

Juliet Shardlow daughter of Pat Owen and Adele
Screengrabs from Adele Robinson i/vs with case study. Family of Pat Owen from Kent who was convicted of 1998 from stealing from her post office branch. Now the Capture IT system is suspected of adding errors to the accounts. 
Source P 175500FR POST OFFICE CAPTURE CASES ROBINSON 0600 VT V2 JJ1
Image:
Juliet Shardlow shows Sky News paperwork which could explain discrepancies logged by Capture

Speaking to Sky News they have opened up for the first time about what happened to her.

Pat was a former sub-postmistress, who was found guilty and given a two-year suspended sentence.

She died in 2003 from heart failure.

Pat Owen and husband David
Screengrabs from Adele Robinson i/vs with case study. Family of Pat Owen from Kent who was convicted of 1998 from stealing from her post office branch. Now the Capture IT system is suspected of adding errors to the accounts. 
Source P 175500FR POST OFFICE CAPTURE CASES ROBINSON 0600 VT V2 JJ1
Image:
David Owen and his wife Pat in happier times

Her daughters describe her as coming home from court after her conviction “a different woman”.

“We didn’t talk about it,” said Juliet Shardlow. “We didn’t talk about it amongst ourselves as a family, we didn’t talk about it with the extended family.

“Our extended family don’t know.”

Pat Owen's daughter Juliet Shardlow
Screengrabs from Adele Robinson i/vs with case study. Family of Pat Owen from Kent who was convicted of 1998 from stealing from her post office branch. Now the Capture IT system is suspected of adding errors to the accounts. 
Source P 175500FR POST OFFICE CAPTURE CASES ROBINSON 0600 VT V2 JJ1
Image:
Juliet Shardlow said her mum Pat was a different person after her conviction

David Owen, Pat’s husband, said she lost a lot of weight after her conviction and at 62 years old “looked like an old gal of 90”.

Capture evidence never heard in court

Pat’s family kept all the documents from her case safe for over two decades and now a key piece of evidence may turn the tide on her conviction, and potentially help others.

A document summarising the findings of an IT expert described the computer Pat used as having “a faulty motherboard”.

It also stated that this “would have produced calculation errors and may have been responsible for the discrepancies subsequently identified by Post Office Counters’ Security and Investigation team.”

Read more from Sky News:
Sub-postmasters: ‘Still going through hell’
Compensation for victims of Capture
Calls on Fujitsu for compensation

The computer expert was due to give evidence in Pat Owen’s defence at court as part of her trial – but failed to turn up on the day.

The family say they never found out exactly why he didn’t show up at court.

David said there was a computer all set up in the courtroom for the expert to use to show malfunctions.

Husband David Owen
Screengrabs from Adele Robinson i/vs with case study. Family of Pat Owen from Kent who was convicted of 1998 from stealing from her post office branch. Now the Capture IT system is suspected of adding errors to the accounts. 
Source P 175500FR POST OFFICE CAPTURE CASES ROBINSON 0600 VT V2 JJ1
Image:
David Owen said his wife Pat never expected to lose her court case

“I heard, now I can’t remember who from, that he’d done work for the Post Office,” he said.

“If he turned up to be a witness in court for us to he wouldn’t get any more work from the Post Office.”

Despite best efforts the expert has never been tracked down. The Post Office has declined to comment.

David also described how his wife never expected to lose her case.

“She was so confident. She knew she didn’t do anything wrong,” he said.

“But when the guilty verdict came out she actually fell to her knees in the dock crying her eyes out shaking.”

He said the judge then asked if he wanted to say anything, and David said he got up in court and spoke at length about his wife’s innocence.

The government announced in December that they will be setting up a redress scheme for Capture victims, similar to Horizon.

So far around 100 people who suffered after being accused of stealing from their branch, while using Capture, could be eligible for redress.

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MP Paul Waugh accuses Meta of turning Facebook Messenger into ‘Epstein’s paedophile island’

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MP Paul Waugh accuses Meta of turning Facebook Messenger into 'Epstein's paedophile island'

An MP has accused Meta of turning Facebook Messenger into “Jeffrey Epstein’s private island” by enabling end-to-end encryption. 

The Science, Innovation and Technology Committee grilled tech giants X, TikTok, Google and Meta today as part of an inquiry into online misinformation and harmful algorithms.

“Twenty years ago, someone like Gary Glitter had to go to the other side of the world to prey on children,” said Labour MP Paul Waugh to Chris Yiu, one of Meta’s directors of public policy.

“Someone like Jeffrey Epstein had to create his own private paedophile island.

“Now, these monsters, all they have to do is go on to set up a group on Facebook Messenger.”

Mr Waugh was referring to Facebook Messenger’s recent implementation of end-to-end encryption, meaning that no one, not even Facebook, can see the contents of encrypted messages.

Law enforcement agencies also cannot see the messages, which is a constant source of tension between tech companies and governments.

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Just last week, Apple removed one of its highest-security tools for users over an alleged request by the Home Office to be able to see its encrypted user data.

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What the Apple security announcement means for your data

“Isn’t it true that you’ve turned Facebook Messenger into Epstein’s own paedophile island and a place where you can do what you want without getting caught?” asked Mr Waugh.

Mr Yiu denied this was the case and said the issue of online child sexual abuse material needed a “whole of society response” where tech companies and law enforcement agencies worked cooperatively.

He also argued end-to-end encryption is a “fundamental technology designed to keep people safe and protect their privacy”.

The select committee’s inquiry is investigating the spread of harmful content online, sparked by last August’s riots.

The widespread unrest took hold across the country after three young girls were stabbed to death in Southport.

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Online network behind far right riots

In the days that followed, illegal content and disinformation spread “widely and quickly” online, according to the communications regulator Ofcom.

Read more from Sky News:
Apple removes end-to-end security encryption tool for UK
Illness kills more than 50 people in Democratic Republic of Congo
Kate Bush, Sam Fender and Damon Albarn release silent protest album

The committee chair Chi Onwurah said Elon Musk, owner of X, was invited to the evidence session but the billionaire did not reply formally.

MP Emily Darlington also quizzed the Meta representative about the company’s recent changes to its content guidelines.

She read out numerous examples of Meta users posting racist, antisemitic and transphobic comments online and asked Mr Yiu how Meta justified allowing those posts to stay online.

“We have received feedback that […] some areas of debates were being suppressed too much on our platform and that some conversations, whilst challenging, should have a space to be discussed,” he said.

X’s representative also faced questions from the MPs, with Ms Darlington asking why verified X users were able to post comments calling politicians rapists and threatening to “rise up and shoot” public figures.

Wifredo Fernandez, X’s senior director for Government Affairs, said he would ask the X team to review the posts.

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