Euro zone economic growth halved in the second quarter to a modest pace, as a mild slowdown in Germany was overshadowed by a surprise stagnation in Italy. Kirsty Basset reports.
The euro zone economy saw a burst of activity at the start of the year. But then slowed to a modest pace in the second quarter, according to Eurostat GDP estimates. Mainly due to France and Italy letting the team down with zero growth. But Europe's powerhouse performed better than expected and helped the bloc as a whole avoid a downward revision. (SOUNDBITE) (English) CMC MARKETS ANALYST JASPER LAWLER SAYING: "Germany now accounting for more of the growth. Italy in fact, no growth whatsoever. And so more of a two-tiered economy in Europe again which is not a healthy state of affairs." German GDP growth grew 0.7 per cent in the first quarter, but then just 0.4 per cent in the second. A trend which could lead to problems ahead. (SOUNDBITE) (English) CMC MARKETS ANALYST JASPER LAWLER SAYING: "Should the slowdown continue, obviously that's a bigger source of concern because obviously Germany is still the powerhouse of Europe and you need Germany firing on as many cylinders as possible to help the recovery across the whole continent." Spain and the Netherlands saw 0.7 per cent and 0.6 per cent respectively. Belgium - 0.5 per cent, while Greece saw a better than expected 0.3 per cent pickup. But the big unknown - how Brexit will eventually affect the bloc. (SOUNDBITE) (English) CMC MARKETS ANALYST JASPER LAWLER SAYING: "Depending on how these trade negotiations work out, that uncertainty is going to linger around for a while and that's going to be a negative factor for European growth." It comes a day after a Reuters poll showed there's little sign of any broad improvement around the corner.