Wednesday, May 29, 2024

Eurozone economy grows half as fast as UK

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Carsten Brzeski, economist at ING, said Germany is struggling in part because of a rise in part-time work.

He said: “Despite a generally strong labour market there is collective concern about a potential loss of prosperity and declining competitiveness in Germany.

“German employment might be at a record high level, but the number of people in part-time employment has also risen to historic highs recently. The total number of hours worked was down to 61.8bn in 2023, compared with 62.3bn in 2019. Meanwhile, labour productivity per person is still slightly below its pre-pandemic level.”

Italy’s economy grew by 0.3pc, while Spain’s tourism-fuelled boom kept going, sending its GDP up by 0.7pc for the second consecutive quarter.

Spain’s output is 2.4pc higher than it was a year earlier, compared to year-on-year growth of just 0.4pc for the eurozone as a whole, and a fall of 0.2pc for Germany.

Claus Vistesen at Pantheon Macroeconomics said the main hope lies in fading inflation, which should ease the strain on household and business finances, and allow for lower interest rates.

He added: “The fall in inflation is now lifting growth in real incomes, leaving room for consumers’ spending to rebound even as the savings rate rises further as rates are expected to stay high.

“The increase in interest rates is still a drag on investment, but this should fade at the margin in the second half of the year, especially if we are right that the European Central Bank now has room to reduce its policy rate, slightly.”

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