Germany’s economy confounded expectations by posting robust growth in the first quarter of the year, while France could summon up none at all, data showed yesterday.
GDP in Germany, Europe’s biggest economy, rose by 0.5 percent on the quarter, bouncing back from a 0.2 percent slide in the last three months of last year. France’s economy stagnated, although it grew slightly at the end of last year.
Meanwhile, official figures released yesterday showed that the eurozone economy confounded expectations and avoided falling back into recession in the first quarter of the year.
Eurostat, the EU’s statistics office, said the eurozone economy was flat when compared with the previous three-month period, against expectations for a 0.2 percent decline. As a result, the eurozone avoided falling back into recession — officially defined as two consecutive quarters of negative growth. In the last quarter of last year, the eurozone contracted by 0.3 percent.
Italy’s economy, the third-largest in the eurozone, contracted by more than expected in the first quarter, falling 0.8 percent and marking the third consecutive quarter contraction, while the Greek economy, mired in recession for a fifth year, shrank 6.2 percent in the first quarter compared with a year earlier, official data showed yesterday.
Even in the wealthy Netherlands, economic output contracted for a third consecutive quarter, shrinking 0.2 percent in the first quarter compared with the previous three months, underscoring just how damaging the crisis has become.
The divergent performance of Germany and France — the eurozone’s two largest economies — will fuel an austerity versus growth debate in the currency bloc as it teeters on the edge of a new crisis, again centered on Greece.
Later yesterday, Francois Hollande was to be sworn in as French president and hot-foot it to Berlin for talks with German Chancellor Angela Merkel.
Hollande is demanding new growth-boosting measures for Europe. Merkel has not disagreed in principle, but Berlin is unlikely to agree to anything that will require extra spending that pushes government debt up again.
Germany is the exception to a eurozone picture, which shows nearly all its constituent parts back in recession or flirting with it.
Data released two weeks ago showed Spain has already succumbed as it struggles to reduce its budget deficit and shore up a banking sector beset with bad property debts.
Meanwhile, British Chancellor of the Exchequer George Osborne on Monday blamed Britain’s economic woes on turmoil in the eurozone, defending the case for his government’s austerity program.
“The eurozone crisis is having a real impact on growth across the European continent, including Britain,” Osborne said before meeting European finance ministers in Brussels yesterday.
Britain has put pressure on eurozone states to get on top of their debt problems, but it refused to sign up to an EU-wide fiscal pact last year aimed at resolving the crisis.
“It is that uncertainty, not austerity, that is doing the real damage to the European recovery and indeed the British recovery,” Osborne said.