Eurozone grew at fastest rate since 2015 after growth upgrade

Jasper Jolly
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The Eurozone grew faster than initial guesses (Source: Getty)

The European economy grew at the fastest rate since the start of 2015 in the first three months of the year, adding to the positive signs of an accelerating recovery.

Eurozone GDP expanded by 0.6 per cent in the first quarter, according to a revised estimate from the European Commission, faster than previously thought.

That means output from the currency bloc increased by 1.9 per cent year-on-year.

Read more: Softer data complicates European Central Bank guidance debate

The UK was the slowest-growing country in the EU during the first quarter, while Eastern European nations, including Romania, Latvia and Slovenia, were the best performers, after recording expansions of more than 1.5 per cent during the three months.

“The Eurozone had a soaring start to 2017,” said: “Claus Vistesen, chief Eurozone economist at Pantheon Macroeconomics. “Investment was the main impetus for growth in the first quarter.”

Eurozone gross fixed capital formation expanded by 1.3 per cent during the quarter, contributing half of the economy-wide growth, after booming by 3.4 per cent in the previous three months.

Read more: Eurozone unemployment falls to lowest in eight years (but inflation slows)

Meanwhile household consumption grew by 0.3 per cent, driving the majority of the remainder of growth gains.

The growth upgrade came ahead of a crucial European Central Bank (ECB) meeting, with policymakers under pressure to remove the negative tilt from their outlook.

The ECB could remove a reference to lower interest rates, although this move, which would be perceived as a more hawkish turn, has been complicated by the recent fall back in inflation, the central bank’s main target.

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