11192017

Eurozone GDP growth halves as French economy stalls

Eurozone inflation has risen food, alcohol and tobacco pricesImage copyright
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Eurozone economic growth halved in the second quarter, but the 19-nation single currency area moved away from deflation.

GDP rose by 0.3% between April and June, in line with expectations but below 0.6% growth in the first quarter.

France, the eurozone’s second-largest economy, saw no growth after expanding by 0.7% in the first quarter.

Eurozone inflation rose to 0.2% in July from 0.1% in June as a result of higher food, alcohol and tobacco prices.

Data also revealed that the eurozone jobless rate remained at 10.1% in June.

The economic growth figures are the first to be published since Britain voted to leave the European Union (EU).

Image copyright
Getty Images

Image caption

French growth in the first three months of the year was boosted by preparations for Euro 2016

Peter Vanden Houte, chief economist at ING Bank, said: “The good news is that the economy still has some momentum, though there is little acceleration to be expected as long as the Brexit story continues to inject some uncertainty into the external environment.”

Across the wider EU, GDP slowed from 0.5% in the first quarter to 0.4% in the three months to June.

In France, first quarter growth had been supported by people booking accommodation and buying tickets for the Euro 2016 football championship.

But growth stalled in the April-to-June period with the Euro 2016 factor stripped-out and after a fall in food spending, according to France’s statistics agency Insee.

France’s finance ministry said the lack of expansion in the second quarter was “disappointing”. However, it stuck to a forecast of 1.5% GDP growth for the full year.

Philippe Waechter, chief economist at Natixis, was sceptical about the target, saying: “Which factors could possibly reverse the trend and give us growth drivers which would allow reaching the 1.5% promised by the government?”

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