Eurozone Recession Ends

Figures released by the European Statistical Agency, Eurostat, show that the Eurozone bloc of countries has returned to (collective) growth after a recession which lasted a record 18 months – however, that is not to say that all of its members have finally returned to growth, of course. Figures for the second quarter of 2013 show that the economy of the 17-member bloc returned to growth with an expansion of 0.3% during Q2. The expansion in economic activity was slightly better than analysts had predicted.

Portugal, which was a recipient of an IMF/EU bailout worth €78 billion in May 2011, posted the best quarterly growth figure with its economy expanding by 1.1% in Q2. The two strongest Eurozone economies, Germany and France both managed to beat analysts’ expectations with growth figures of 0.7 and 0.5% respectively.

However, the economic fortunes of the Eurozone remain patchy. Italy and Spain both saw their economies continue to contract by 0.1 and 0.2% respectively. There are nagging doubts that both countries may require financial support to meet their obligations is money market borrowing costs rise, but both are already taking steps to reform their economies. Spain did require financial support to help its banking sector, but this was not considered to be a sovereign bailout. The Dutch economy also contracted by 0.2% in Q2.

The verdict of Olli Rehn, EC Vice-president on the latest economic news was cautious optimism: "There are still substantial obstacles to overcome: the growth figures remain low and the tentative signs of growth are still fragile. A number of member states still have unacceptably high unemployment rates; the implementation of essential, but difficult reforms across the EU is still in its early stages. So there is still a very long way to go."

Germany is set to go to the polls next month – the question is whether Chancellor Angela Merkel can buck the trend and be the first leader to survive a popular vote in the aftermath of the Global Financial Crisis.