Eurozone overtakes UK with robust growth in Q2

The eurozone economy confirmed a robust expansion in the second quarter of the year, growing twice as much as Britain for the second consecutive quarter, preliminary estimates released by the European Union’s statistics agency showed yesterday.

The reading confirmed the trend begun this year as the 19-country currency bloc consolidates its recovery while Britain starts to feel the negative impact of its decision to quit the European Union.

Gross domestic product in the eurozone added 0.6 percent on the quarter, after a slightly downwardly revised 0.5 percent rise in the first quarter, Eurostat’s data showed.

In the April-June period, Britain’s economic output grew by 0.3 percent on the quarter, edging up from a sluggish rate of 0.2 percent in the first three months of the year.

Britain’s slowdown comes after the country showed robust growth last year, outgrowing the eurozone in the last three quarters.

The loss of pace coincides with the beginning of divorce talks with the EU in March and increased prospects of no access to the EU market after Brexit for Britain-based companies.

Meanwhile, the eurozone economy has picked up speed, bolstered by higher business optimism, strong domestic consumption and decreasing unemployment, which in June hit its lowest level since 2009.

 In annualized terms, the eurozone economy grew 2.3 percent in the second quarter after a 2 percent rise in the first three months of the year, Eurostat said.

“All in all, the eurozone economy has rounded out the first half of the year in a very healthy state and seems to be set up nicely for continued firm growth for the rest of 2017,” Bert Colijn, senior economist at ING, said.

In its latest forecasts, released in July, the International Monetary Fund estimated the eurozone would grow 1.9 percent this year and 1.7 percent in 2018, above Britain’s projected growth of 1.7 percent this year and 1.5 percent next.

The EU economics commissioner, Pierre Moscovici, said the new estimates could likely lead to an upwardly revision of the commission’s forecasts, which in May predicted a 1.7 percent rise of eurozone’s output this year and 1.8 percent in 2018.