The continuing importance of Germany and France to the eurozone's economy has been underlined today by figures showing above-average expansion in both nations' economies last quarter.
The continuing importance of Germany and France to the eurozone’s economy has been underlined today by figures showing above-average expansion in both nations’ economies last quarter.
France’s economic output rebounded to growth last quarter, expanding by 0.4% after shrinking by 0.1% in the quarter to June.
Germany’s economy grew by 0.5%, after registering a 0.3% increase the previous quarter. Both readings were around what analysts and economists expected.
However, the countries may struggle to repeat the growth over this quarter, as economies in trading partners Spain and Belgium have stalled, and Portugal shrunk, for a fourth straight quarter.
Greece remains the anchor dragging on its neighbours, as its economy shrank by 5.2% last quarter measured year on year. This was, however, a slight improvement on its 7.4% contraction in the second quarter.
The currency bloc in total posted just 0.2% expansion between July and September, the same figure Eurostat gave for the 27-member European Union.
The European Commission cut its 2011 and 2012 eurozone forecasts this month, to 1.5% and 0.5%, from 1.6% and 1.8% respectively.
EU Economic and Monetary Affairs Commissioner Olli Rehn said the economic rebound had “come to a standstill”. European Central Bank head Mario Draghi already predicted “mild” recession for the end of this year.
Germany’s statistics office in Wiesbaden pointed to household spending as the main growth driver in its country last quarter, though corporate investment also helped. Net trade hardly had an effect on German GDP either way.
Growth in consumer spending and investment were also factors to thank in France.
To the south, Italian bond yields have topped 7% – a level widely regarded as unsustainable. The spread of French, Belgian and Spanish 10-year yields over Bunds hit record highs since the eurozone began in 1999.
The Bank of Spain said it sold €3.16bn of long-dated paper, against a maximum target of €3.5bn at its latest bond auction. Yield on its 10-year bonds reached 6.28%, while its 12-month debt at auction yielded 5.022%.