Eurozone economy stays flat as Germany and France falter, says BCC

22 August 2014

The eurozone economy stayed flat in Q2 3014, according to the British Chambers of Commerce (BCC) August Global Monthly Economic Review.

According to the BCC research, the eurozone economy has grown by only 0.7 per cent in the past year – too slow to revitalise business investment or trigger job creation.

While the UK and US have seen growth which has enabled them to surpass their pre-banking crisis peaks, the eurozone economy is still smaller than before the onset of recession in 2008.

As a result, the European Central Bank (ECB) is under even greater pressure to start broad-based bond buying or quantitative easing.

The BCC report says: “With each individual quarter of near-zero growth, the eurozone’s vulnerabilities: weak productivity, a stagnating labour force and a fragile banking system, become more firmly entrenched.”

A key factor for the poor eurozone performance was a contraction in German GPD – the first since the end of 2012 - which accounts for almost 30 per cent of eurozone output.

The report says that escalating geopolitical tensions with Russia damaged confidence in Germany, hitting export sectors such as machinery, equipment, cars and chemical goods.

Meanwhile, the news was also bleak from France which saw zero economic growth and, BBC says, is now “skating on the edge of an official triple-dip recession.”

The country’s economy has barely grown since 2012 and the French  government is under pressure to  cut its budget deficit and the persistently high jobless rate.

The report adds: “A crisis in the eurozone’s second largest economy could have consequences on the outlook of the currency union.”

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