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Eurozone GDP: Europe outpaces UK and US with strongest growth in a decade - business live Eurozone GDP: Europe outpaces UK and US with strongest growth in a decade - business live
(35 minutes later)
Pan Pylas of Associated Press has a good take on today’s growth figures:
The eurozone economy, for so long a source of uncertainty, has enjoyed its best year in a decade, clear evidence it has broken out of its prolonged and acute debt crisis that raised fears about the very survival of the euro currency.
In its first estimate for the fourth quarter, Eurostat, the European Union’s statistics agency, said Tuesday that the eurozone expanded by 0.6 percent in the October-December period from the three months before.
That more-than-healthy level of growth means that for the whole of 2017, the eurozone economy expanded by 2.5 percent, its best performance since 2007, when it grew 3 percent. The eurozone even grew faster than the U.S., which expanded by 2.3 percent.
In the decade since 2007, the eurozone has had to grapple with one crisis after another, starting with the financial crash of 2008 that prompted the deepest worldwide recession since World War II. That exposed the weak underbelly of the eurozone the state of the public finances in a number of member economies.
Four countries Greece, Ireland, Portugal and Cyprus had to be bailed out by their partners in the eurozone and the International Monetary Fund, and in return they made deep budget cuts to get their public finances into shape, hitting their economies hard.
The Greek economy, for example, shed around a quarter of its output, and saw unemployment and poverty levels ratchet higher.
It’s only recently that fears of a eurozone break-up have eased. Greece, notably, is set to emerge from its bailout era this summer, eight years after it first faced potential bankruptcy.
Another chart showing how the eurozone outpaced its major rivals last year:
The Eurozone rules! #GDP pic.twitter.com/bJ40RGIzFD
ING’s Bert Colijn is also impressed that the eurozone grew by 2.5% during 2017.ING’s Bert Colijn is also impressed that the eurozone grew by 2.5% during 2017.
He writes:He writes:
Economic growth has shifted to a substantially faster growth path over the course of 2017, and current GDP data confirms that. Eurozone growth for 2017 as a whole was stronger than many advanced markets, like the US and UK for example.Economic growth has shifted to a substantially faster growth path over the course of 2017, and current GDP data confirms that. Eurozone growth for 2017 as a whole was stronger than many advanced markets, like the US and UK for example.
While detailed breakdowns have yet to be released, it seems that the Eurozone economy continues to fire on all cylinders. Investment has yet to recover from the crisis fully but has been an essential contributor to growth during the year.While detailed breakdowns have yet to be released, it seems that the Eurozone economy continues to fire on all cylinders. Investment has yet to recover from the crisis fully but has been an essential contributor to growth during the year.
However, Colijn is also concerned that the strong euro could hold back growth in 2018 (as exports will be less competitive)However, Colijn is also concerned that the strong euro could hold back growth in 2018 (as exports will be less competitive)
Eurozone GDP rounds up a very strong year, but ING's @BertColijn says the big question is if the strong euro will offset the effects of improving external demandhttps://t.co/tGa3DZmJCIEurozone GDP rounds up a very strong year, but ING's @BertColijn says the big question is if the strong euro will offset the effects of improving external demandhttps://t.co/tGa3DZmJCI
Analysts at Ulster Bank are hopeful that the eurozone will continue to grow robustly in 2018.Analysts at Ulster Bank are hopeful that the eurozone will continue to grow robustly in 2018.
Eurozone GDP rose 0.6% q/q in Q4 (in line with consenus) following 0.7% in both Q3 and Q2 - consistent with a very strong 2.5% in 2017 as a whole following 1.8% in 2016, while the latest data suggest that very positive momentum is being sustained in the early stages of 2018 pic.twitter.com/moMAUanyUOEurozone GDP rose 0.6% q/q in Q4 (in line with consenus) following 0.7% in both Q3 and Q2 - consistent with a very strong 2.5% in 2017 as a whole following 1.8% in 2016, while the latest data suggest that very positive momentum is being sustained in the early stages of 2018 pic.twitter.com/moMAUanyUO
Jacob Deppe, Head of Trading at online trading platform, Infinox, is impressed by Europe’s growth last year:Jacob Deppe, Head of Trading at online trading platform, Infinox, is impressed by Europe’s growth last year:
“Anything the US economy can do the Eurozone economy can do, slightly better it seems.“Anything the US economy can do the Eurozone economy can do, slightly better it seems.
“This is the best economic growth the Eurozone has seen since before the Global Financial Crisis.“This is the best economic growth the Eurozone has seen since before the Global Financial Crisis.
“Where we go from here is anyone’s guess. But with both the US and Eurozone growing in tandem and with Asian economies on a roll, the hope is that 2018 delivers continued growth, further confidence and economic stability for the first time in a decade.“Where we go from here is anyone’s guess. But with both the US and Eurozone growing in tandem and with Asian economies on a roll, the hope is that 2018 delivers continued growth, further confidence and economic stability for the first time in a decade.
“There remain issues on the horizon. Unemployment in the Eurozone, while falling, is still too high, particularly among the young.“There remain issues on the horizon. Unemployment in the Eurozone, while falling, is still too high, particularly among the young.
We now have confirmation that Europe and America both grew much faster than Britain last year.We now have confirmation that Europe and America both grew much faster than Britain last year.
Economists Rupert Seggins has tweeted a handy chart:Economists Rupert Seggins has tweeted a handy chart:
Economic growth in 2017 (Q4/Q4 % change):UK: 1.5%US: 2.5%Euro Area: 2.7% pic.twitter.com/86zcfYdZpAEconomic growth in 2017 (Q4/Q4 % change):UK: 1.5%US: 2.5%Euro Area: 2.7% pic.twitter.com/86zcfYdZpA
Aila Mihr of Danske Bank says Europe’s economy is expanding strongly:Aila Mihr of Danske Bank says Europe’s economy is expanding strongly:
🇪🇺Solid expansion continues: Q4 17 #eurozone #growth at 0.6% q/q, leaving 2017 annual euro area GDP growth at 2.5%, highest since 2007. No contribution breakdown yet, but slowdown in Q4 potentially due to lower positive contribution from net exports due to #EUR headwind. pic.twitter.com/Cj4BR7lGLi🇪🇺Solid expansion continues: Q4 17 #eurozone #growth at 0.6% q/q, leaving 2017 annual euro area GDP growth at 2.5%, highest since 2007. No contribution breakdown yet, but slowdown in Q4 potentially due to lower positive contribution from net exports due to #EUR headwind. pic.twitter.com/Cj4BR7lGLi
NEWSFLASH: The eurozone and the wider EU have both posted their strongest annual growth since the financial crisis.NEWSFLASH: The eurozone and the wider EU have both posted their strongest annual growth since the financial crisis.
New GDP figures from Eurostat confirm that the European recovery remains on track, with annual growth of 2.5% during 2017 in the EU and the narrower single currency block. That’s the strongest annual growth in a decade.New GDP figures from Eurostat confirm that the European recovery remains on track, with annual growth of 2.5% during 2017 in the EU and the narrower single currency block. That’s the strongest annual growth in a decade.
In comparison, the UK grew by around 1.8% during 2017 (according to figures released last week)In comparison, the UK grew by around 1.8% during 2017 (according to figures released last week)
Eurostat also reports that the eurozone and the EU both grew by 0.6% in the final three months of 2017, partly thanks to France’s 0.6% growth and Spain’s 0.7%.Eurostat also reports that the eurozone and the EU both grew by 0.6% in the final three months of 2017, partly thanks to France’s 0.6% growth and Spain’s 0.7%.
Compared to Q4 2016, seasonally adjusted GDP rose by 2.7% in the euro area and by 2.6% in the EU28.Compared to Q4 2016, seasonally adjusted GDP rose by 2.7% in the euro area and by 2.6% in the EU28.
In another boost, Eurozone and EU growth in the third quarter of last year has been revised up, from +0.6% to +0.7%.In another boost, Eurozone and EU growth in the third quarter of last year has been revised up, from +0.6% to +0.7%.
There may be some celebrations in Brussels as this data filters through. Three years ago, the eurozone was being rocked by the Greek debt crisis. Now, the region is looking calmer and more secure, despite Brexit.There may be some celebrations in Brussels as this data filters through. Three years ago, the eurozone was being rocked by the Greek debt crisis. Now, the region is looking calmer and more secure, despite Brexit.
Over in Frankfurt, the European Central Bank might feel vindicated after launching a massive stimulus programme to ward off deflation, drive down unemployment and keep the economy growing.Over in Frankfurt, the European Central Bank might feel vindicated after launching a massive stimulus programme to ward off deflation, drive down unemployment and keep the economy growing.
Economists are concerned by the rise in UK consumer borrowing:Economists are concerned by the rise in UK consumer borrowing:
The UK unsecured credit boom which we have been assured is slowing in fact accelerated to an annual rate of 9.5% in December #BoEThe UK unsecured credit boom which we have been assured is slowing in fact accelerated to an annual rate of 9.5% in December #BoE
Food for thought for the @bankofengland MPC next week. Mortgage approvals lowest since Jan 2015, but unsecured consumer credit reverses recent slowdown with £1.52bn of new borrowing in December (+9.5% YoY). V difficult balancing act for UK policymakers pic.twitter.com/wOQ5ct62q4Food for thought for the @bankofengland MPC next week. Mortgage approvals lowest since Jan 2015, but unsecured consumer credit reverses recent slowdown with £1.52bn of new borrowing in December (+9.5% YoY). V difficult balancing act for UK policymakers pic.twitter.com/wOQ5ct62q4
Breaking; The number of new mortgages approved in Britain has hit its lowest in almost three years.Breaking; The number of new mortgages approved in Britain has hit its lowest in almost three years.
Just 61,039 mortgages were signed off in December, a drop of over 3,000 compared to November. That’s the smallest number since January 2015.Just 61,039 mortgages were signed off in December, a drop of over 3,000 compared to November. That’s the smallest number since January 2015.
#UnitedKingdom Mortgage Approvals at 61.04K https://t.co/xjNGJUUXea pic.twitter.com/cYefMMRst2#UnitedKingdom Mortgage Approvals at 61.04K https://t.co/xjNGJUUXea pic.twitter.com/cYefMMRst2
Bank of England figures also show that UK consumers borrowed an extra £1.5bn on credit last month.Bank of England figures also show that UK consumers borrowed an extra £1.5bn on credit last month.
That pushed the annual growth in credit to 9.5%, up from 9.3%.That pushed the annual growth in credit to 9.5%, up from 9.3%.
So, people are finding it harder to buy a new house, and borrowing more on credit to make ends meet. Not a good sign for the UK economy in 2018.So, people are finding it harder to buy a new house, and borrowing more on credit to make ends meet. Not a good sign for the UK economy in 2018.
Poland’s economy accelerated last year, according to new data.Poland’s economy accelerated last year, according to new data.
Poland’s GDP expanded by 4.6% in 2017, up from 2.9% in 2016.Poland’s GDP expanded by 4.6% in 2017, up from 2.9% in 2016.
Mining companies are leading the selloff today:
Rubbish start for the miners https://t.co/R1IxsL7EzZ pic.twitter.com/2Xxayru8rg
Europe’s major stock markets have all fallen this morning, despite the solid growth figures from France and Spain.
The UK’s FTSE 100, the German DAX and the French CAC are all in the red, following last night’s losses on Wall Street.
The selloff in government bonds in recent days is starting to spook the equity markets, encouraging traders to sell shares.
Markets have had a strong run, of course, but analysts are wondering whether a selloff is imminent. Donald Trump’s tax cuts are likely to push US inflation higher, especially if more firms pass savings onto their staff in pay rises. That in turn increases the chance of US interest rates moving up.
Yesterday, Goldman Sachs predicted that “a correction of some kind seems a high probability in the coming months.”
Goldman warns of a market correction as S&P 500 & MSCI World have entered their longest period w/o correction of >5%. Says bear market risks low. Says drawdowns within bull markets of 10% or more are not uncommon. Goldman finds 22 since 1945. pic.twitter.com/ujghn9JqLP
Some reaction to the Spanish growth data:
Spanish economy grew by more than 3% (again!) in 2017. Still 1% away from full capacity but output gap is narrowing fast. Should be closed by early 2019, after France but way before Italy. Spain now entering a 'slowdown' phase after stellar years. My take: https://t.co/9KXNyued1l pic.twitter.com/cdIcrCvq0y
Newsflash: Spain’s economy grew by 0.7% in the final quarter of 2017.
That’s a slight slowdown, following 0.8% growth in July-September, but still a decent performance. It should make Spain one of the faster-growing European members.
Spain’s economy grew by 3.1% during 2017, matching 2016’s performance, according to the INE statistics body.
The last few months of 2017 were dominated by the Catalonian independence crisis, as the region tried to break away from Madrd.
Update: the pound is slipping lower.
GBPUSD back below 1.40; it really had no business above that level
The most encouraging part of the French growth report is that business investment has risen sharply.
This means French firms have boosted their spending on equipment, offices and factories - a sign that they’re more confident about their future prospects.
Fred Ducrozet of Swiss bank Pictet says it’s a ‘big story’:
French GDP growth was 1.9% in 2017, highest since 2011. All about domestic demand although net exports have started to contribute positively at the end of the year. pic.twitter.com/j7LybYjTkl
The big story in France (and the euro area), is investment. Up 9% in two years, and back above pre-crisis levels for the first time in Q4-17. pic.twitter.com/6JVz5AIIRP
Brexit worries are weighing on the pound again this morning.
Sterling has shed half a cent against the US dollar, to $1.402, after leaked government papers showed that Britain’s economy would be worse off under all three likely Brexit scenarios.
My colleague Rowena Mason explains:
The document suggested that chemicals, clothing, manufacturing, food and drink, and cars and retail would be the hardest hit and every UK region would also be affected negatively in all the modelled scenarios, with the north-east, the West Midlands and Northern Ireland facing the biggest falls in economic performance.
France is benefitting from President Emmanuel Macron’s election win and the upturn in the global economy, says Bloomberg.
They add:
Macron’s government is currently working with unions and business lobbies to overhaul France’s job training system, and will move on to unemployment insurance in coming months.
Finance Minister Bruno Le Maire plans a major economy law for the spring that aims to further loosen restrictions on businesses, as well as increase profit-sharing plans for employees.
French economy sustains momentum, has its best year since 2011 https://t.co/Uz89HfQlCS pic.twitter.com/iFtwnKumXy
Newsflash: France’s economy grew by 0.6% in the last three months.
Strong business investment and rising exports boosted growth, and compensated for a slowdown in household spending.
This means France slightly outpaced Britain, which grew by 0.5% in the last quarter.
Statistics body INSEE says:
Total gross fixed capital formation (business investment) accelerated slightly to +1.1% after +0.9%
Household consumption expenditure slowed down (+0.3% after +0.6%).
Foreign trade balance contributed positively to GDP growth (+0.6 points after −0.5 points): exports accelerated markedly (+2.6% after +1.1%) while imports slowed down sharply (+0.7% after +2.4%).
Inventory changes made a negative contribution (−0.5 points after +0.3 points).
The figures also show that France’s economy expanded by 1.9% during 2017 - the strongest annual growth since 2011.
French revival? GDP up 1.9% in 2017, highest since 2011 ...4Q GDP +2.4% on year thanks mainly to business investment #macron #france
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
Today we learn if Europe’s economic recovery is on track.
New eurozone growth figures, due at 10am GMT, are expected to show that the single currency bloc expanded by 0.6% in October-December. That would be another solid quarter, as the region puts the debt crisis behind it.
Individual figures from France (in a moment) and Spain will also give some country-level insights.
We’ll also be watching the markets closely. Yesterday, government bond prices fell (pushing up bond yields), fuelling fears that the bull market might be over.
Wall Street suffered losses last night, and European markets are expected to drop this morning.
Opening callsFTSE100 is expected to open 46 points lower at 7,625DAX is expected to open 99 points lower at 13,225CAC40 is expected to open 34 points lower at 5,487
Jasper Lawler of London Capital Group explains:
After such a promising end to last week where the Dow rallied 200 points to a fresh record close, trading on Monday couldn’t have been more different. US stocks experienced a spectacular reversal and plummeted overnight, as the US 10 year treasury yield pushed relentlessly higher. Concerns are starting to enter the market that inflation could be catching up and higher interest rates could pour cold water on the bull run.
As the US treasury bond sell off depended, US treasury yields shot up to a peak of 2.73%, the highest level since 2014.The Dow dumped 177 points in its worst trading day so far this year and the S&P dived 0.7%.
Plus, new UK consumer credit figures will show if Britons melted their credit cards last month, or reined in spending.
Here’s the agenda:
6.30am GMT: French GDP for Q4 2017 (first estimate)
8am GMT: Spanish GDP for Q 2017 (first estimate
9.30am: UK consumer credit and mortgage approval figures for December 2017
10am: Eurozone GDP for Q4 2017 (first estimate)