Eurozone sows the seeds of recovery with 0.3% growth

France and Germany are leading Europe's charge into recovery. But don't crack open the bubbly yet: it's slow going.

by Emma Haslett
Last Updated: 23 Aug 2013
Turns out it’s not just the UK steaming into recovery mode: figures published this morning show that after 18 months of contraction, the 17-nation eurozone has come out of recession, beating forecasts to grow 0.3% during the second quarter of 2013.

Germany and France, who also published GDP figures this morning, led the charge, with growth in Germany rising to 0.7% during the second quarter, while the French economy expanded by 0.5%, after two quarters of contraction.

France’s growth was surprisingly robust: the consensus among forecasters had been about 0.2%, so stronger-than-expected growth will come as a relief to President Francois Hollande, who has come under fire lately for his perceived failures at turning the French economy around.

But it’s worth pointing out things in the eurozone still aren’t all sunshine and flowers: two days ago, Greece reported a GDP contraction of 4.6% during the second quarter – an improvement on a 5.6% contraction in the first quarter of the year, but not exactly good news. Spain is also still in recession, with GDP falling 0.1%, up from a 0.5% drop in the previous quarter. So there’s a long way to go before all 17 countries return to growth.

Closer to home, things are looking slightly rosier on the unemployment front, with figures published by the Office for National Statistics showing the number of people looking for work in the three months to June fell by 4,000 to 2.51 million during the second quarter. The number of people in employment also rose, by 69,000.

Again, it’s not all good news: the number of people out of work for more than two years rose by 10,000 to 474,000, as did the number of people out of work for more than a year, which rose by 7,000 to 909,000.

And household earnings have risen by 1.1% since this time last year – although inflation is now at 2.8%, showing consumers are unlikely to indulge in that much-needed spending spree anytime soon.

Here’s hoping the good news about house prices, the services and manufacturing sectors, retail, and a whole host of other economic indicators begins to filter through to the jobs market soon.

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