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There has been good news on the Eurozone economy recently.

The Spanish economy has been the star of the larger EU economies so far this year. In the third quarter, it grew at a robust pace of 0.7%. In itself, that news is good but not that good. The Netherlands grew at the same pace, as did Cyprus and Slovakia, while Portugal and Bulgaria grew a tad higher. But look at the picture over the last 12 months, then Spain grew by 3.2%, across the EU only Romania and Bulgaria enjoyed stronger growth than that. This shows that not only is Spain growing at a robust pace, it has been doing so for several quarters.

Breaking the figures down for quarterly growth, Bulgaria and Cyprus grew by 0.8%, then we get Spain, Cyprus, Slovakia and the Netherlands. Romania grew at 0.6%. The UK grew by 0.5%, as did Finland, Austria, Latvia and Greece.

Germany expanded by 0.2% quarter on quarter, and by 1.7% year on year, so the idea that the EU is reliant on German growth is a myth. France expanded by 0.2% at the quarterly rate and by 1.1% year on year. Quarter on quarter, Italy grew a tad faster than Germany and France, but year on year, a little slower.


We don’t have data on all EU countries yet, but so far there is no indication of any country suffering from recession.

But what about the rest of this year?

The latest flash purchasing managers Index tracking the Eurozone jumped to an 11 month high. The index is far from foolproof, but it’s probably the best guide to what happened in November that we have so far.

But this time, Germany saw a good one – actually, the purchasing managers' index for Germany fell to a two-month low, it is just that the index has been performing well of late, and the reading was still good by recent history. Other indicators that provide a hint on things to come are looking good, or at least good ish. The German ifo Business Climate Indicator has stood at 110.4 for two months, looking at past data on how the index has corresponded with growth in the period to follow, this suggests that quarterly growth in Germany should rise to around 0.5% in Q4.

So far then, an okay picture is emerging – it’s a story of an economy struggling along, but frankly, given the awful performance for much of this decade, we should be doing much better by now.

Capital Economics reckons that the German economy will slow next year, as inflation rises eating into real earnings growth while political instability in Europe – with elections in Holland, France and Germany due, and quite possibly in Italy too.