Eurozone economy outperforms US and UK for first time in four years

The eurozone economy outperformed both the UK and US for the first time in four years according to official figures released this morning, with France and Italy in particular exceeding expectations.

GDP in the single currency area grew by 0.4% in the first quarter of 2015, slightly below predictions of 0.5% but a 1% boost on figures last year, as falling oil prices and the European Central Bank's quantitative easing programme contributed to the continuing recovery.

France's GDP grew by 0.6%, while Italy's economy expanded for the first time in more than three years, swelling by 0.3%.

In the same period, UK growth slowed to 0.3%, its slowest pace in three years, while the US economy slowed down by 0.4%.

Spain's economy grew by 0.9%, the fastest rate since before the global financial crisis, according to figures released several weeks ago.

The French recovery was largely driven by household expenditure, as lower prices for oil meant French consumers had greater purchasing power. Household spending grew by 0.7% after stagnating at the end of last year, which was enough to cover a slowdown in exports and net trade.

Germany, the eurozone's strongest economy, slowed by 0.4%, with foreign trade in particular having a downward effect on growth.

Despite the positive figures, analysts warn that the recovery could be short-lived. The price of oil is recovering and the stalemate in negotiations between Greece and its eurozone creditors is casting a shadow over growth, says Jessica Hines, European economist at global analysts Capital Economics.

"The pace of growth in the eurozone was faster than in the UK and US but the signs are that that outperformance is likely to be short-lived. The most immediate one is the potential for a messy end to the Greek crisis. We've not seen much progress, it seems to be two steps forward and one step back, if that," says Hines.

Athens surprised observers by making a €750 million repayment to the International Monetary Fund a day early on Monday. However, reports have emerged that Greece raided an emergency fund to make the payment and that the IMF is backing away from any further bailout deals.

Greece slid back into recession according to the figures. Its economy contracted by 0.2%, the second consecutive quarterly contraction.

Eurozone economy outperforms US and UK for first time in four years | Business