Eurozone economy back to pre-crisis level - Financial Times

Eurozone GDP returns to pre-crisis levels
Strong French performance helps single currency area beat growth expectations

The eurozone economy began the year in stronger fashion than expected, as gross domestic product finally surpassed pre-crisis levels and grew by 0.6 per cent in the first quarter, helped by a relatively robust performance by France.

The eurozone figure, released by Eurostat, the European Commission’s statistical arm, showed growth at the fastest rate since the beginning of 2015, as overall economic output reached its highest level, above the first quarter of 2008.
It is also the first time since the beginning of 2011 that growth in the single currency area has outpaced economic expansion in the broader EU and the UK, which recorded growth of 0.5 per cent and 0.4 per cent respectively.


The British government, which is facing an In/Out referendum on EU membership on 23 June, until recently emphasised the UK’s status as the fastest growing economy in the G7.
Analysts had expected growth of about 0.4 per cent in the eurozone — only a slight improvement on the 0.3 per cent figure recorded for the final three months of 2015.
The initial eurozone and wide EU GDP figures do not provide a breakdown of performance by member states.
However, national data from France showed that the region’s second-largest economy fuelled some of the momentum for the improved recovery.
France’s economy grew 0.5 per cent, outstripping economists’ expectations and adding to a recent run of improving fortune for Socialist President François Hollandein the build-up to next year’s elections.

The Spanish economy also beat expectations, growing by 0.8 per cent in the first three months of the year, despite the lack of a government and the prolonged political uncertainty.
The growth rate was the same as in the previous two quarters, defying expectations of a slight weakening of growth this year. Spain’s central bank had predicted growth of 0.7 per cent in the first three months of 2016.
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Friday’s preliminary figure for France is above the 0.3 per cent growth that the country — the eurozone’s second-biggest economy — recorded during the past three months of 2015. It was boosted by the biggest increase in household spending since 2004, according to Insee, the official statistics bureau.
While the figures will increase confidence in the region’s recovery, difficulties remain — including inflation, which fell in the year to April to minus 0.2 per cent from zero the previous month.
Eurostat said the core measure of inflation, which excludes items with more volatile prices such as food and energy goods, also fell — dipping from 1 per cent in March to 0.8 per cent. Both the headline and core figures were the lowest since February this year.
Unemployment remains in double figures, although it fell from 10.4 per cent in February to 10.2 per cent in March.

Economists welcomed the French growth data, which they said would boost Mr Hollande’s standing. “There is a stronger situation in the labour market and that will create strong momentum this year,” said Philippe Waechter, chief economist at Natixis Asset Management.”
He added: “It’s perfect timing for Hollande.”
The latest data come as Mr Hollande, the least popular president in France’s modern history, according to recent surveys, is trying to claw back support as he and his party prepare for next year’s presidential contest.
This week data showed that French unemployment in March saw the biggest monthly fall in 15 years.
The figure, the sharpest fall since 2000, more than made up for an increase in the jobless numbers in February and brought about the first quarterly fall since well before Mr Hollande took office in 2012.