Economic sentiment in the euro zone continues to rise as France and Spain post robust second quarter GDP figures. Optimism in the economies of the 19 countries using the euro grew for a third consecutive month, reaching a ten-year high in July, according to data released by the European Commission on Friday. The Economic Sentiment Index, which offers a snapshot of confidence levels across several sectors rose to 111.2, up slightly from 111.1 in June and 109.2 in May. The figures, which are at their highest since before the 2007 economic crash, were driven by improvements in the outlook for services and construction.
Meanwhile second quarter GDP numbers released for France and Spain pointed to continued consolidation of the recovery in two of the bloc’s largest economies. France’s economy expanded by 0.5 percent for the second quarter in a row, marking four straight quarters of growth. A rebound in exports to 3.1 percent after a contraction of 0.7 percent in the first quarter was largely to thank for the strong figures. The election of Emmanuel Macron in May on a pro-business ticket – promising to cut corporation tax and reform labour laws – has added to the rise in French business confidence.
Spain, the euro zone’s fourth largest economy, posted its best quarterly growth in three years at 0.9 percent. Earlier this week the Spanish economy minister, Luis de Guindos, revised the country’s 2017 growth estimate up to 3.2 percent following years of swingeing budget cuts and public sector pay freezes in the wake of the financial crisis. While unemployment remains high at 19 percent it has fallen significantly from its peak of 27 percent in 2013.
The strong euro zone growth figures stand in marked contrast to those of the UK which came in at just 0.3 percent in the first quarter, a marginal improvement on the 0.2 percent recorded in the first three months of the year. A weakened sterling and a rise in inflation since the Brexit vote last June have been blamed for the UK’s sluggish performance.