Analysis: Eurozone finally breaks free of recession

THE eurozone has finally emerged from its prolonged recession as the latest figures show that it grew by 0.3 per cent in the second quarter of this year.

The Euro logo is seen in front of the European Central Bank (ECB) building. Picture: Getty

It is the first time that output in the single currency bloc has increased since late 2011.

The end of the recession, which lasted for six straight quarters, may mark a key moment for economies throughout the world as they seek to emerge from downturns.

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In Britain, the fragile recovery has been dogged by fears over the impact of turbulence in the eurozone, its biggest trading partner.

The 0.3 per cent growth across the 17 countries of the single currency area compared to the last quarter, announced by the European Union’s Eurostat office, was slightly ahead of expectations of 0.2 per cent.

It was largely driven by Germany, Europe’s biggest economy, gaining steam with a 0.7 per cent increase in output after a flat start to the year.

Meanwhile, France is officially out of recession after posting 0.5 per cent growth.

There were also encouraging signs elsewhere, notably from Portugal, which grew 1.1 per cent while there were even signs that Greece’s deterioration is starting to tail off.

Figures for quarter-on-quarter growth for the country were not available, but its decline compared to last year, of 4.6 per cent, was an improvement on the 5.6 per cent fall recorded in the last quarter.

Quarter-on-quarter declines of 0.1 per cent and 0.2 per cent in Spain and Italy were better than at the start of the year – though they continued to be in recession.

Europe’s improvement eases fears that the UK could be dragged down by international financial chaos.

Britain has enjoyed two successive quarters of growth this year, with the latest three-month spell seeing gross domestic product climb by 0.6 per cent and forecasts of a similar rise in the current period.

But the Bank of England has warned that the recovery remains weak by historical standards and that the potential of storms from the continent have been seen as one of the 
key threats to a sustained upturn.