Germany, Britain lead Europe's nascent economic recovery

Fri Aug 23, 2013 11:04am EDT
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By Alexandra Hudson and Olesya Dmitracova

BERLIN/LONDON (Reuters) - Germany confirmed on Friday it had enjoyed its fastest rate of economic expansion in more than a year in the second quarter, and Britain revised up its growth to the same rate.

Although recession still haunts many of Europe's major economies, like Italy, Spain and the Netherlands, analysts said the German and British data showed that at least two of the region's major economic engines are moving into a higher gear.

Consumer morale has jumped to its highest level in two years this month, other data showed on Friday, in a bright sign for the current quarter as well.

Strong domestic demand drove a 0.7 percent quarterly increase in German gross domestic product in the second quarter, matching its growth rate in the first quarter of 2012.

Britain's economy expanded at the same rate as Germany's, equaling the growth it recorded in the third quarter of last year, fuelled by a broad-based pick-up in activity.

The signs of robust growth have also led to more upbeat comments from the region's central bankers, who have hitherto hinted at interest rates remaining low for some time to come.

The German figures reflected a construction flurry after a harsh winter, firms' strong appetite for machines and equipment and healthy private consumption.

"The composition of growth is very good. It is being driven more strongly from within, which is good for Germany and the euro zone," said economist Holger Sandte at Nordea.   Continued...

Shoppers cross Oxford Street in central London August 15, 2013. REUTERS/Toby Melville