The pace of economic recovery has slowed
in Europe’s major economies, according to official estimates.
Germany, Europe’s largest economy, has
seen a sharp slowdown in the third quarter, with growth of 0.7 per cent
compared with the record expansion of 2.3 per cent it reported in the previous
three months.
In France, GDP grew by 0.4 per cent
between July and September, compared with growth of 0.7 per cent in the
previous quarter.
The 16 eurozone members grew 0.4% on
average, down from 1 per cent growth before.
Italy also saw its rate of recovery
decline, to 0.2 per cent from 0.5 per cent in the second quarter.
But in crisis-hit Greece, the economy
contracted at a slower rate of -1.1 per cent, compared with -1.7 per cent.
Last month, figures revealed that the UK
economy had grown by 0.8 per cent in the third quarter.
‘Solid growth’ in Germany
Germany’s growth rate in the second
quarter – now revised from 2.2 per cent to 2.3 per cent – was the fastest since
the country reunified.
Announcing its first estimate of
third-quarter growth, the German statistics office Destatis said the upturn was
continuing.
But it said the slower pace had been
expected, given the record result in the second quarter.
Demand for its goods is crucial to the
world’s second largest exporter, and Destatis said both domestic and foreign
demand had made a positive contribution to growth.
It said the reasons for expansion were
wide-ranging, with household and government expenditure, demand for machinery
and equipment, as well as imports and exports all contributing.
Higher foreign demand for German-made
machinery could indicate that companies overseas are investing for future
growth.
But Capital Economics said that although
it was expecting Germany to continue to outperform other European economies, it
thought that the eurozone’s recovery would “grind to a halt” next year.
New investment
France’s finance minister Christine
Lagarde said that the recovery there was looking “solid” and pointed out that
household spending in particular had picked up.
“Companies are starting to invest. The
acceleration in household spending reflects the favourable effects of the
labour market’s stabilisation,” she said in statement.
France is facing a record budget deficit
of 7.7 per cent of GDP this year.
It has announced government spending
cuts and the end of some tax breaks to try to bring it down.
But economists have warned that these
measures could cause growth to slow further next year.
“There is no major deceleration compared
with where we were in the spring, but we have not yet tested French domestic
spending for the impact of fiscal consolidation, which is starting in January,”
said Deutsche Bank economist Gilles Moec.
The government is forecasting economic
growth of 2 per cent for 2011, which would also help mend its finances. But
this is higher than many economists are forecasting.
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