AP

Allianz's chief economic advisor puts the odds of Europe falling into recession at 70%.

Mohamed El-Erian told Financial News that due to Brexit and a shrinking German economy, there's a good chance that Europe will suffer its second crisis in a decade.

Germany's central bank warned of a potential recession this week, while UK Prime Minister Boris Johnson continues to push the idea of a no-deal Brexit.

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Europe has a 70% chance of crashing into its second recession in the space of a decade, according to leading economist and bond expert, Mohamed El-Erian.

El-Erian, Allianz's chief economic adviser, told Financial News that Europe is "quickly losing momentum" and the EU is "teetering on the edge of a significant slump."

The call comes at a tumultuous time for Europe, as Germany's central bank just warned Europe's biggest economy could well be headed for a recession after it contracted 0.1% last quarter.

Germany's finance minister said the last recession cost it $55 billion, and the nation would need to "muster" a similar amount to combat the next crisis.

Meanwhile, markets have been reeling at the possibility of the UK crashing out of the EU with no deal, as UK Prime Minister Boris Johnson appears willing to take the leap. Adding to the fear, the Sunday Times recently reported a leaked memo from the government warning that there were be a shortage of fresh food, fuel, and drugs in a no-deal Brexit.

Read more: Three of Europe's biggest economies are probably in recession — and the ECB is out of bullets

"The five major economies in Europe are all distracted by their own problems," El-Erian told Financial News. "Virtually nothing is getting done. No pro-growth policies are emerging from these countries," he added.

For example, Italy faces an uncertain future. Not only is the country's huge debt a major burden, but markets have been reacting poorly to uncertainty around who will be the country's new leader. They plunged after Matteo Salvini, the country's deputy prime minister, called for a no-confidence vote against current leader Giuseppe Conte.

Other experts have also turned bearish on Europe's growth prospects.

"Western Europe has persistently disappointed with GDP growing only 1% over the past four quarters," JPMorgan wrote in their global data watch note. "Of particular concern is the sharp contraction in industry at midyear, led by Germany where business surveys have fallen toward their lows during the sovereign crisis."

"Rising recession fears in Germany, along with rising risk of a UK no-deal Brexit, make Europe an unexpected fault line for a global downturn," it added.

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